Correlation Between Federated Total and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Federated Total and Federated Hermes 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 Federated Hermes 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 Federated Hermes Conservative, you can compare the effects of market volatilities on Federated Total and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Federated Hermes.
Diversification Opportunities for Federated Total and Federated Hermes
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and Federated is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return and Federated Hermes Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Con 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Con has no effect on the direction of Federated Total i.e., Federated Total and Federated Hermes go up and down completely randomly.
Pair Corralation between Federated Total and Federated Hermes
Assuming the 90 days horizon Federated Total Return is expected to generate 4.0 times more return on investment than Federated Hermes. However, Federated Total is 4.0 times more volatile than Federated Hermes Conservative. It trades about 0.09 of its potential returns per unit of risk. Federated Hermes Conservative is currently generating about 0.21 per unit of risk. If you would invest 938.00 in Federated Total Return on August 30, 2024 and sell it today you would earn a total of 6.00 from holding Federated Total Return or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Total Return vs. Federated Hermes Conservative
Performance |
| Timeline |
| Federated Total Return |
| Federated Hermes Con |
Federated Total and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Total and Federated Hermes
The main advantage of trading using opposite Federated Total and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Total position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.| Federated Total vs. Us Government Plus | Federated Total vs. Franklin Adjustable Government | Federated Total vs. Us Government Securities | Federated Total vs. Fidelity Series Government |
| Federated Hermes vs. Heartland Value Plus | Federated Hermes vs. Mutual Of America | Federated Hermes vs. American Century Etf | Federated Hermes vs. Boston Partners Small |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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