Correlation Between Federated Total and Vanguard Financials
Can any of the company-specific risk be diversified away by investing in both Federated Total and Vanguard Financials 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 Vanguard Financials 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 Vanguard Financials Index, you can compare the effects of market volatilities on Federated Total and Vanguard Financials 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 Vanguard Financials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Vanguard Financials.
Diversification Opportunities for Federated Total and Vanguard Financials
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federated and Vanguard is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return and Vanguard Financials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Financials Index 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 Vanguard Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Financials Index has no effect on the direction of Federated Total i.e., Federated Total and Vanguard Financials go up and down completely randomly.
Pair Corralation between Federated Total and Vanguard Financials
Assuming the 90 days horizon Federated Total Return is expected to generate 0.41 times more return on investment than Vanguard Financials. However, Federated Total Return is 2.45 times less risky than Vanguard Financials. It trades about 0.08 of its potential returns per unit of risk. Vanguard Financials Index is currently generating about -0.03 per unit of risk. If you would invest 939.00 in Federated Total Return on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Federated Total Return or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Federated Total Return vs. Vanguard Financials Index
Performance |
| Timeline |
| Federated Total Return |
| Vanguard Financials Index |
Federated Total and Vanguard Financials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Total and Vanguard Financials
The main advantage of trading using opposite Federated Total and Vanguard Financials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Total position performs unexpectedly, Vanguard Financials 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 Vanguard Financials will offset losses from the drop in Vanguard Financials' 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 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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