Correlation Between Federated Total and Us Government
Can any of the company-specific risk be diversified away by investing in both Federated Total and Us Government 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 Us Government 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 Us Government Securities, you can compare the effects of market volatilities on Federated Total and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Us Government.
Diversification Opportunities for Federated Total and Us Government
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and UGSFX is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Federated Total i.e., Federated Total and Us Government go up and down completely randomly.
Pair Corralation between Federated Total and Us Government
Assuming the 90 days horizon Federated Total is expected to generate 1.0 times less return on investment than Us Government. But when comparing it to its historical volatility, Federated Total Return is 1.11 times less risky than Us Government. It trades about 0.26 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,175 in Us Government Securities on November 28, 2024 and sell it today you would earn a total of 19.00 from holding Us Government Securities or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Total Return vs. Us Government Securities
Performance |
| Timeline |
| Federated Total Return |
| Us Government Securities |
Federated Total and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Total and Us Government
The main advantage of trading using opposite Federated Total and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Total position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Federated Total vs. Short Real Estate | Federated Total vs. Nexpoint Real Estate | Federated Total vs. Redwood Real Estate | Federated Total vs. Cohen Steers Real |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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