Correlation Between Federated Total and Federated Short-intermedia
Can any of the company-specific risk be diversified away by investing in both Federated Total and Federated Short-intermedia 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 Short-intermedia 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 Short Intermediate Duration, you can compare the effects of market volatilities on Federated Total and Federated Short-intermedia 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 Short-intermedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Federated Short-intermedia.
Diversification Opportunities for Federated Total and Federated Short-intermedia
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and FEDERATED is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return and Federated Short Intermediate D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short-intermedia 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 Short-intermedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short-intermedia has no effect on the direction of Federated Total i.e., Federated Total and Federated Short-intermedia go up and down completely randomly.
Pair Corralation between Federated Total and Federated Short-intermedia
Assuming the 90 days horizon Federated Total Return is expected to generate 3.41 times more return on investment than Federated Short-intermedia. However, Federated Total is 3.41 times more volatile than Federated Short Intermediate Duration. It trades about 0.06 of its potential returns per unit of risk. Federated Short Intermediate Duration is currently generating about 0.16 per unit of risk. If you would invest 887.00 in Federated Total Return on August 29, 2024 and sell it today you would earn a total of 63.00 from holding Federated Total Return or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Total Return vs. Federated Short Intermediate D
Performance |
| Timeline |
| Federated Total Return |
| Federated Short-intermedia |
Federated Total and Federated Short-intermedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Total and Federated Short-intermedia
The main advantage of trading using opposite Federated Total and Federated Short-intermedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Total position performs unexpectedly, Federated Short-intermedia 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 Short-intermedia will offset losses from the drop in Federated Short-intermedia's long position.| Federated Total vs. Angel Oak Ultrashort | Federated Total vs. Siit Ultra Short | Federated Total vs. Rbc Short Duration | Federated Total vs. Federated Short Intermediate Duration |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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