Correlation Between Federated Global and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both Federated Global and Federated Emerging 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 Global and Federated Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Global Total and Federated Emerging Market, you can compare the effects of market volatilities on Federated Global and Federated Emerging 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 Global with a short position of Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Federated Emerging.
Diversification Opportunities for Federated Global and Federated Emerging
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Total and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market and Federated Global 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 Global Total are associated (or correlated) with Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of Federated Global i.e., Federated Global and Federated Emerging go up and down completely randomly.
Pair Corralation between Federated Global and Federated Emerging
Assuming the 90 days horizon Federated Global is expected to generate 9.23 times less return on investment than Federated Emerging. In addition to that, Federated Global is 1.16 times more volatile than Federated Emerging Market. It trades about 0.01 of its total potential returns per unit of risk. Federated Emerging Market is currently generating about 0.11 per unit of volatility. If you would invest 650.00 in Federated Emerging Market on September 3, 2024 and sell it today you would earn a total of 142.00 from holding Federated Emerging Market or generate 21.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Global Total vs. Federated Emerging Market
Performance |
| Timeline |
| Federated Global Total |
| Federated Emerging Market |
Federated Global and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Federated Emerging
The main advantage of trading using opposite Federated Global and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global position performs unexpectedly, Federated Emerging 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 Emerging will offset losses from the drop in Federated Emerging's long position.| Federated Global vs. Federated Hermes Mdt | Federated Global vs. Federated Mdt Large | Federated Global vs. Federated High Income | Federated Global vs. Federated Hermes Conservative |
| Federated Emerging vs. Evaluator Conservative Rms | Federated Emerging vs. Aqr Diversified Arbitrage | Federated Emerging vs. Fidelity Advisor Diversified | Federated Emerging vs. Prudential Core Conservative |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |