Correlation Between Federated Ultrashort and Federated Total
Can any of the company-specific risk be diversified away by investing in both Federated Ultrashort and Federated Total 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 Ultrashort and Federated Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Ultrashort Bond and Federated Total Return, you can compare the effects of market volatilities on Federated Ultrashort and Federated Total 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 Ultrashort with a short position of Federated Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ultrashort and Federated Total.
Diversification Opportunities for Federated Ultrashort and Federated Total
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and Federated is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ultrashort Bond and Federated Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Total Return and Federated Ultrashort 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 Ultrashort Bond are associated (or correlated) with Federated Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Total Return has no effect on the direction of Federated Ultrashort i.e., Federated Ultrashort and Federated Total go up and down completely randomly.
Pair Corralation between Federated Ultrashort and Federated Total
Assuming the 90 days horizon Federated Ultrashort is expected to generate 1.2 times less return on investment than Federated Total. But when comparing it to its historical volatility, Federated Ultrashort Bond is 3.33 times less risky than Federated Total. It trades about 0.21 of its potential returns per unit of risk. Federated Total Return is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 916.00 in Federated Total Return on September 1, 2024 and sell it today you would earn a total of 30.00 from holding Federated Total Return or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Federated Ultrashort Bond vs. Federated Total Return
Performance |
| Timeline |
| Federated Ultrashort Bond |
| Federated Total Return |
Federated Ultrashort and Federated Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ultrashort and Federated Total
The main advantage of trading using opposite Federated Ultrashort and Federated Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ultrashort position performs unexpectedly, Federated Total 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 Total will offset losses from the drop in Federated Total's long position.| Federated Ultrashort vs. Federated Emerging Market | Federated Ultrashort vs. Federated Mdt All | Federated Ultrashort vs. Federated Mdt Balanced | Federated Ultrashort vs. Federated Global Allocation |
| Federated Total vs. Federated Emerging Market | Federated Total vs. Federated Mdt All | Federated Total vs. Federated Mdt Balanced | Federated Total vs. Federated Global Allocation |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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