Correlation Between Federated Short-term and Federated Bond
Can any of the company-specific risk be diversified away by investing in both Federated Short-term and Federated Bond 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-term and Federated Bond 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 Federated Bond Fund, you can compare the effects of market volatilities on Federated Short-term and Federated Bond 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-term with a short position of Federated Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-term and Federated Bond.
Diversification Opportunities for Federated Short-term and Federated Bond
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and Federated Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Bond and Federated Short-term 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 Federated Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Bond has no effect on the direction of Federated Short-term i.e., Federated Short-term and Federated Bond go up and down completely randomly.
Pair Corralation between Federated Short-term and Federated Bond
Assuming the 90 days horizon Federated Short-term is expected to generate 7.07 times less return on investment than Federated Bond. But when comparing it to its historical volatility, Federated Short Term Income is 2.57 times less risky than Federated Bond. It trades about 0.05 of its potential returns per unit of risk. Federated Bond Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 831.00 in Federated Bond Fund on September 3, 2024 and sell it today you would earn a total of 7.00 from holding Federated Bond Fund or generate 0.84% 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. Federated Bond Fund
Performance |
| Timeline |
| Federated Short Term |
| Federated Bond |
Federated Short-term and Federated Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short-term and Federated Bond
The main advantage of trading using opposite Federated Short-term and Federated Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short-term position performs unexpectedly, Federated Bond 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 Federated Bond will offset losses from the drop in Federated Bond's long position.| Federated Short-term vs. Dreyfusstandish Global Fixed | Federated Short-term vs. Commonwealth Global Fund | Federated Short-term vs. Franklin Mutual Global | Federated Short-term vs. Mirova Global Green |
| Federated Bond vs. Tax Managed Mid Small | Federated Bond vs. Small Cap Value | Federated Bond vs. Champlain Small | Federated Bond vs. Rbc Small Cap |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |