Correlation Between Heartland Value and Federated Max
Can any of the company-specific risk be diversified away by investing in both Heartland Value and Federated Max 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 Heartland Value and Federated Max into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Value Plus and Federated Max Cap Index, you can compare the effects of market volatilities on Heartland Value and Federated Max 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 Heartland Value with a short position of Federated Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and Federated Max.
Diversification Opportunities for Heartland Value and Federated Max
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Heartland and Federated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Federated Max Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Max Cap and Heartland Value 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 Heartland Value Plus are associated (or correlated) with Federated Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Max Cap has no effect on the direction of Heartland Value i.e., Heartland Value and Federated Max go up and down completely randomly.
Pair Corralation between Heartland Value and Federated Max
Assuming the 90 days horizon Heartland Value is expected to generate 1.86 times less return on investment than Federated Max. In addition to that, Heartland Value is 1.09 times more volatile than Federated Max Cap Index. It trades about 0.03 of its total potential returns per unit of risk. Federated Max Cap Index is currently generating about 0.06 per unit of volatility. If you would invest 675.00 in Federated Max Cap Index on September 14, 2024 and sell it today you would earn a total of 94.00 from holding Federated Max Cap Index or generate 13.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heartland Value Plus vs. Federated Max Cap Index
Performance |
| Timeline |
| Heartland Value Plus |
| Federated Max Cap |
Heartland Value and Federated Max Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Value and Federated Max
The main advantage of trading using opposite Heartland Value and Federated Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value position performs unexpectedly, Federated Max 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 Max will offset losses from the drop in Federated Max's long position.| Heartland Value vs. Heartland Value Fund | Heartland Value vs. Large Cap Fund | Heartland Value vs. Permanent Portfolio Class | Heartland Value vs. Aquagold International |
| Federated Max vs. Counterpoint Tactical Municipal | Federated Max vs. T Rowe Price | Federated Max vs. Alliancebernstein National Municipal | Federated Max vs. Transamerica Intermediate Muni |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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