Correlation Between Federated Short-term and Federated Total
Can any of the company-specific risk be diversified away by investing in both Federated Short-term and Federated Total 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 Total 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 Total Return, you can compare the effects of market volatilities on Federated Short-term and Federated Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-term and Federated Total.
Diversification Opportunities for Federated Short-term and Federated Total
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and Federated Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Total Return 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Total Return has no effect on the direction of Federated Short-term i.e., Federated Short-term and Federated Total go up and down completely randomly.
Pair Corralation between Federated Short-term and Federated Total
Assuming the 90 days horizon Federated Short-term is expected to generate 1.51 times less return on investment than Federated Total. But when comparing it to its historical volatility, Federated Short Term Income is 2.36 times less risky than Federated Total. It trades about 0.12 of its potential returns per unit of risk. Federated Total Return is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 945.00 in Federated Total Return on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Federated Total Return or generate 0.53% 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 Total Return
Performance |
| Timeline |
| Federated Short Term |
| Federated Total Return |
Federated Short-term and Federated Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short-term and Federated Total
The main advantage of trading using opposite Federated Short-term and Federated Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short-term position performs unexpectedly, Federated Total 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 Total will offset losses from the drop in Federated Total's long position.| Federated Short-term vs. Dodge Cox Stock | Federated Short-term vs. Pace Large Value | Federated Short-term vs. Fundamental Large Cap | Federated Short-term vs. Americafirst Large Cap |
| Federated Total vs. Angel Oak Ultrashort | Federated Total vs. Siit Ultra Short | Federated Total vs. Rbc Short Duration | Federated Total vs. Federated Short Intermediate Duration |
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 CEOs Directory module to screen CEOs from public companies around the world.
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