Correlation Between Federated Short-term and Federated
Can any of the company-specific risk be diversified away by investing in both Federated Short-term and Federated 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 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 U S, you can compare the effects of market volatilities on Federated Short-term and Federated 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-term and Federated.
Diversification Opportunities for Federated Short-term and Federated
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and Federated U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated U S 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated U S has no effect on the direction of Federated Short-term i.e., Federated Short-term and Federated go up and down completely randomly.
Pair Corralation between Federated Short-term and Federated
Assuming the 90 days horizon Federated Short Term Income is expected to generate 0.49 times more return on investment than Federated. However, Federated Short Term Income is 2.06 times less risky than Federated. It trades about 0.13 of its potential returns per unit of risk. Federated U S is currently generating about 0.03 per unit of risk. If you would invest 771.00 in Federated Short Term Income on August 29, 2024 and sell it today you would earn a total of 77.00 from holding Federated Short Term Income or generate 9.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Federated Short Term Income vs. Federated U S
Performance |
| Timeline |
| Federated Short Term |
| Federated U S |
Federated Short-term and Federated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short-term and Federated
The main advantage of trading using opposite Federated Short-term and Federated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short-term position performs unexpectedly, Federated 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 will offset losses from the drop in Federated's long position.| Federated Short-term vs. Vanguard Emerging Markets | Federated Short-term vs. Ab Select Longshort | Federated Short-term vs. Transamerica Emerging Markets | Federated Short-term vs. T Rowe Price |
| Federated vs. Vanguard Short Term Tax Exempt | Federated vs. HUMANA INC | Federated vs. Aquagold International | Federated vs. Barloworld Ltd ADR |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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