Correlation Between Growth Allocation and Federated Fund
Can any of the company-specific risk be diversified away by investing in both Growth Allocation and Federated Fund 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 Growth Allocation and Federated Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Allocation Fund and Federated Fund For, you can compare the effects of market volatilities on Growth Allocation and Federated Fund 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 Growth Allocation with a short position of Federated Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Allocation and Federated Fund.
Diversification Opportunities for Growth Allocation and Federated Fund
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and Federated is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Growth Allocation Fund and Federated Fund For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Fund For and Growth Allocation 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 Growth Allocation Fund are associated (or correlated) with Federated Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Fund For has no effect on the direction of Growth Allocation i.e., Growth Allocation and Federated Fund go up and down completely randomly.
Pair Corralation between Growth Allocation and Federated Fund
Assuming the 90 days horizon Growth Allocation Fund is expected to generate 1.87 times more return on investment than Federated Fund. However, Growth Allocation is 1.87 times more volatile than Federated Fund For. It trades about -0.03 of its potential returns per unit of risk. Federated Fund For is currently generating about -0.11 per unit of risk. If you would invest 1,312 in Growth Allocation Fund on November 1, 2024 and sell it today you would lose (11.00) from holding Growth Allocation Fund or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Allocation Fund vs. Federated Fund For
Performance |
| Timeline |
| Growth Allocation |
| Federated Fund For |
Growth Allocation and Federated Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Allocation and Federated Fund
The main advantage of trading using opposite Growth Allocation and Federated Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Allocation position performs unexpectedly, Federated Fund 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 Fund will offset losses from the drop in Federated Fund's long position.| Growth Allocation vs. Stone Ridge Diversified | Growth Allocation vs. Wilmington Diversified Income | Growth Allocation vs. Oklahoma College Savings | Growth Allocation vs. Allianzgi Diversified Income |
| Federated Fund vs. Riverparknext Century Growth | Federated Fund vs. Growth Allocation Fund | Federated Fund vs. Small Cap Growth | Federated Fund vs. Qs Defensive Growth |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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