Correlation Between Federated Emerging and Dimensional 2035
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Dimensional 2035 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 Dimensional 2035 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 Dimensional 2035 Target, you can compare the effects of market volatilities on Federated Emerging and Dimensional 2035 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 Dimensional 2035. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Dimensional 2035.
Diversification Opportunities for Federated Emerging and Dimensional 2035
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Dimensional is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Dimensional 2035 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2035 Target 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 Dimensional 2035. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2035 Target has no effect on the direction of Federated Emerging i.e., Federated Emerging and Dimensional 2035 go up and down completely randomly.
Pair Corralation between Federated Emerging and Dimensional 2035
Assuming the 90 days horizon Federated Emerging is expected to generate 2.88 times less return on investment than Dimensional 2035. But when comparing it to its historical volatility, Federated Emerging Market is 1.58 times less risky than Dimensional 2035. It trades about 0.13 of its potential returns per unit of risk. Dimensional 2035 Target is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,389 in Dimensional 2035 Target on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Dimensional 2035 Target or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Emerging Market vs. Dimensional 2035 Target
Performance |
| Timeline |
| Federated Emerging Market |
| Dimensional 2035 Target |
Federated Emerging and Dimensional 2035 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Dimensional 2035
The main advantage of trading using opposite Federated Emerging and Dimensional 2035 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Dimensional 2035 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 Dimensional 2035 will offset losses from the drop in Dimensional 2035's long position.| Federated Emerging vs. Fidelity Advisor Financial | Federated Emerging vs. 1919 Financial Services | Federated Emerging vs. Mesirow Financial Small | Federated Emerging vs. John Hancock Financial |
| Dimensional 2035 vs. Intal High Relative | Dimensional 2035 vs. Dfa International | Dimensional 2035 vs. Dfa Inflation Protected | Dimensional 2035 vs. Dfa International Small |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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