Correlation Between Federated Total and Federated Mid-cap
Can any of the company-specific risk be diversified away by investing in both Federated Total and Federated Mid-cap 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 Mid-cap 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 Mid Cap Index, you can compare the effects of market volatilities on Federated Total and Federated Mid-cap 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 Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Federated Mid-cap.
Diversification Opportunities for Federated Total and Federated Mid-cap
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return and Federated Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mid Cap 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 Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mid Cap has no effect on the direction of Federated Total i.e., Federated Total and Federated Mid-cap go up and down completely randomly.
Pair Corralation between Federated Total and Federated Mid-cap
Assuming the 90 days horizon Federated Total Return is expected to under-perform the Federated Mid-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Total Return is 5.05 times less risky than Federated Mid-cap. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Federated Mid Cap Index is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,606 in Federated Mid Cap Index on November 3, 2024 and sell it today you would lose (5.00) from holding Federated Mid Cap Index or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Total Return vs. Federated Mid Cap Index
Performance |
| Timeline |
| Federated Total Return |
| Federated Mid Cap |
Federated Total and Federated Mid-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Total and Federated Mid-cap
The main advantage of trading using opposite Federated Total and Federated Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Total position performs unexpectedly, Federated Mid-cap 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 Mid-cap will offset losses from the drop in Federated Mid-cap's long position.| Federated Total vs. Federated Hermes Mdt | Federated Total vs. Federated Mdt Large | Federated Total vs. Federated High Income | Federated Total vs. Federated Hermes Intermediate |
| Federated Mid-cap vs. Jpmorgan Small Cap | Federated Mid-cap vs. Jpmorgan Intrepid Growth | Federated Mid-cap vs. Jpmorgan Small Cap | Federated Mid-cap vs. Jpmorgan Intrepid Value |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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