Correlation Between Federated Total and Ab Global
Can any of the company-specific risk be diversified away by investing in both Federated Total and Ab Global 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 Total and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Total Return and Ab Global Risk, you can compare the effects of market volatilities on Federated Total and Ab Global 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 Total with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Ab Global.
Diversification Opportunities for Federated Total and Ab Global
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and CABIX is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return and Ab Global Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Risk and Federated Total 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 Total Return are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Risk has no effect on the direction of Federated Total i.e., Federated Total and Ab Global go up and down completely randomly.
Pair Corralation between Federated Total and Ab Global
Assuming the 90 days horizon Federated Total is expected to generate 3.18 times less return on investment than Ab Global. But when comparing it to its historical volatility, Federated Total Return is 1.29 times less risky than Ab Global. It trades about 0.03 of its potential returns per unit of risk. Ab Global Risk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,586 in Ab Global Risk on September 12, 2024 and sell it today you would earn a total of 223.00 from holding Ab Global Risk or generate 14.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Total Return vs. Ab Global Risk
Performance |
| Timeline |
| Federated Total Return |
| Ab Global Risk |
Federated Total and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Total and Ab Global
The main advantage of trading using opposite Federated Total and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Total position performs unexpectedly, Ab Global 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 Ab Global will offset losses from the drop in Ab Global's long position.| Federated Total vs. Locorr Market Trend | Federated Total vs. Investec Emerging Markets | Federated Total vs. Kinetics Market Opportunities | Federated Total vs. Sp Midcap Index |
| Ab Global vs. Prudential Government Income | Ab Global vs. Dreyfus Government Cash | Ab Global vs. Payden Government Fund | Ab Global vs. Sit Government Securities |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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