Correlation Between Federated Short and State Street
Can any of the company-specific risk be diversified away by investing in both Federated Short and State Street at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Federated Short and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Short Term Income and State Street Target, you can compare the effects of market volatilities on Federated Short and State Street and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Federated Short with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short and State Street.
Diversification Opportunities for Federated Short and State Street
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and State is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target and Federated Short is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Federated Short Term Income are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Target has no effect on the direction of Federated Short i.e., Federated Short and State Street go up and down completely randomly.
Pair Corralation between Federated Short and State Street
Assuming the 90 days horizon Federated Short is expected to generate 2.95 times less return on investment than State Street. But when comparing it to its historical volatility, Federated Short Term Income is 1.94 times less risky than State Street. It trades about 0.06 of its potential returns per unit of risk. State Street Target is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,143 in State Street Target on September 12, 2024 and sell it today you would earn a total of 16.00 from holding State Street Target or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Short Term Income vs. State Street Target
Performance |
| Timeline |
| Federated Short Term |
| State Street Target |
Federated Short and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short and State Street
The main advantage of trading using opposite Federated Short and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short position performs unexpectedly, State Street can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in State Street will offset losses from the drop in State Street's long position.| Federated Short vs. Franklin Growth Opportunities | Federated Short vs. Tfa Alphagen Growth | Federated Short vs. Praxis Growth Index | Federated Short vs. Eip Growth And |
| State Street vs. Science Technology Fund | State Street vs. Red Oak Technology | State Street vs. Icon Information Technology | State Street vs. Hennessy Technology Fund |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |