Correlation Between Federated Ultrashort and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Federated Ultrashort and Old Westbury 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 Old Westbury 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 Old Westbury Short Term, you can compare the effects of market volatilities on Federated Ultrashort and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ultrashort and Old Westbury.
Diversification Opportunities for Federated Ultrashort and Old Westbury
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and Old is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ultrashort Bond and Old Westbury Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Short 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Short has no effect on the direction of Federated Ultrashort i.e., Federated Ultrashort and Old Westbury go up and down completely randomly.
Pair Corralation between Federated Ultrashort and Old Westbury
Assuming the 90 days horizon Federated Ultrashort Bond is expected to generate 0.86 times more return on investment than Old Westbury. However, Federated Ultrashort Bond is 1.17 times less risky than Old Westbury. It trades about 0.23 of its potential returns per unit of risk. Old Westbury Short Term is currently generating about 0.18 per unit of risk. If you would invest 829.00 in Federated Ultrashort Bond on September 4, 2024 and sell it today you would earn a total of 99.00 from holding Federated Ultrashort Bond or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 38.66% |
| Values | Daily Returns |
Federated Ultrashort Bond vs. Old Westbury Short Term
Performance |
| Timeline |
| Federated Ultrashort Bond |
| Old Westbury Short |
Federated Ultrashort and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ultrashort and Old Westbury
The main advantage of trading using opposite Federated Ultrashort and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ultrashort position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Federated Ultrashort vs. California High Yield Municipal | Federated Ultrashort vs. T Rowe Price | Federated Ultrashort vs. Franklin High Yield | Federated Ultrashort vs. Victory High Income |
| Old Westbury vs. Old Westbury All | Old Westbury vs. Old Westbury Credit | Old Westbury vs. Old Westbury Large | Old Westbury vs. Old Westbury Municipal |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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