Correlation Between American Funds and Federated Short-term
Can any of the company-specific risk be diversified away by investing in both American Funds and Federated Short-term 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 American Funds and Federated Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Federated Short Term Income, you can compare the effects of market volatilities on American Funds and Federated Short-term 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 American Funds with a short position of Federated Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Federated Short-term.
Diversification Opportunities for American Funds and Federated Short-term
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and FEDERATED is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Federated Short Term Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Term and American Funds 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 American Funds Fundamental are associated (or correlated) with Federated Short-term. 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 Term has no effect on the direction of American Funds i.e., American Funds and Federated Short-term go up and down completely randomly.
Pair Corralation between American Funds and Federated Short-term
Assuming the 90 days horizon American Funds Fundamental is expected to generate 6.47 times more return on investment than Federated Short-term. However, American Funds is 6.47 times more volatile than Federated Short Term Income. It trades about 0.29 of its potential returns per unit of risk. Federated Short Term Income is currently generating about 0.05 per unit of risk. If you would invest 8,504 in American Funds Fundamental on September 4, 2024 and sell it today you would earn a total of 370.00 from holding American Funds Fundamental or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Funds Fundamental vs. Federated Short Term Income
Performance |
| Timeline |
| American Funds Funda |
| Federated Short Term |
American Funds and Federated Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Federated Short-term
The main advantage of trading using opposite American Funds and Federated Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Federated Short-term 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-term will offset losses from the drop in Federated Short-term's long position.| American Funds vs. Federated Short Term Income | American Funds vs. Rbc Short Duration | American Funds vs. Maryland Short Term Tax Free | American Funds vs. Aqr Long Short Equity |
| Federated Short-term vs. American Century Etf | Federated Short-term vs. Lord Abbett Small | Federated Short-term vs. Victory Rs Partners | Federated Short-term vs. Royce Opportunity Fund |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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