Correlation Between Federated Emerging and Massachusetts Investors
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Massachusetts Investors 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 Massachusetts Investors 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 Massachusetts Investors Trust, you can compare the effects of market volatilities on Federated Emerging and Massachusetts Investors 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 Massachusetts Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Massachusetts Investors.
Diversification Opportunities for Federated Emerging and Massachusetts Investors
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federated and Massachusetts is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Massachusetts Investors Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massachusetts Investors 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 Massachusetts Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massachusetts Investors has no effect on the direction of Federated Emerging i.e., Federated Emerging and Massachusetts Investors go up and down completely randomly.
Pair Corralation between Federated Emerging and Massachusetts Investors
Assuming the 90 days horizon Federated Emerging is expected to generate 5.59 times less return on investment than Massachusetts Investors. But when comparing it to its historical volatility, Federated Emerging Market is 2.03 times less risky than Massachusetts Investors. It trades about 0.13 of its potential returns per unit of risk. Massachusetts Investors Trust is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 3,810 in Massachusetts Investors Trust on September 1, 2024 and sell it today you would earn a total of 194.00 from holding Massachusetts Investors Trust or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Emerging Market vs. Massachusetts Investors Trust
Performance |
| Timeline |
| Federated Emerging Market |
| Massachusetts Investors |
Federated Emerging and Massachusetts Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Massachusetts Investors
The main advantage of trading using opposite Federated Emerging and Massachusetts Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Massachusetts Investors 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 Massachusetts Investors will offset losses from the drop in Massachusetts Investors' 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 |
| Massachusetts Investors vs. Mfs Prudent Investor | Massachusetts Investors vs. Mfs Prudent Investor | Massachusetts Investors vs. Mfs Prudent Investor | Massachusetts Investors vs. Mfs Prudent Investor |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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