Correlation Between Federated Emerging and Ab Bond
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Ab Bond 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 Emerging and Ab Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Emerging Market and Ab Bond Inflation, you can compare the effects of market volatilities on Federated Emerging and Ab Bond 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 Emerging with a short position of Ab Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Ab Bond.
Diversification Opportunities for Federated Emerging and Ab Bond
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and ABNTX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Ab Bond Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Bond Inflation and Federated Emerging 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 Emerging Market are associated (or correlated) with Ab Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Bond Inflation has no effect on the direction of Federated Emerging i.e., Federated Emerging and Ab Bond go up and down completely randomly.
Pair Corralation between Federated Emerging and Ab Bond
Assuming the 90 days horizon Federated Emerging Market is expected to generate 1.32 times more return on investment than Ab Bond. However, Federated Emerging is 1.32 times more volatile than Ab Bond Inflation. It trades about 0.23 of its potential returns per unit of risk. Ab Bond Inflation is currently generating about 0.29 per unit of risk. If you would invest 785.00 in Federated Emerging Market on November 27, 2024 and sell it today you would earn a total of 9.00 from holding Federated Emerging Market or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Emerging Market vs. Ab Bond Inflation
Performance |
| Timeline |
| Federated Emerging Market |
| Ab Bond Inflation |
Federated Emerging and Ab Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Ab Bond
The main advantage of trading using opposite Federated Emerging and Ab Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Ab Bond 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 Ab Bond will offset losses from the drop in Ab Bond's long position.| Federated Emerging vs. Glg Intl Small | Federated Emerging vs. Guidemark E Fixed | Federated Emerging vs. Shelton Emerging Markets | Federated Emerging vs. Arrow Managed Futures |
| Ab Bond vs. Ab Small Cap | Ab Bond vs. Legg Mason Partners | Ab Bond vs. United Kingdom Small | Ab Bond vs. Nuveen Small Cap |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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