Correlation Between IShares Core and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both IShares Core and Federated Hermes 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 IShares Core and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Total and Federated Hermes ETF, you can compare the effects of market volatilities on IShares Core and Federated Hermes 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 IShares Core with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Federated Hermes.
Diversification Opportunities for IShares Core and Federated Hermes
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Federated is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Total and Federated Hermes ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes ETF and IShares Core 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 iShares Core Total are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes ETF has no effect on the direction of IShares Core i.e., IShares Core and Federated Hermes go up and down completely randomly.
Pair Corralation between IShares Core and Federated Hermes
Given the investment horizon of 90 days iShares Core Total is expected to generate 1.08 times more return on investment than Federated Hermes. However, IShares Core is 1.08 times more volatile than Federated Hermes ETF. It trades about -0.08 of its potential returns per unit of risk. Federated Hermes ETF is currently generating about -0.12 per unit of risk. If you would invest 4,586 in iShares Core Total on August 25, 2024 and sell it today you would lose (25.00) from holding iShares Core Total or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Total vs. Federated Hermes ETF
Performance |
| Timeline |
| iShares Core Total |
| Federated Hermes ETF |
IShares Core and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Federated Hermes
The main advantage of trading using opposite IShares Core and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.| IShares Core vs. First Trust Low | IShares Core vs. First Trust Enhanced | IShares Core vs. First Trust Tactical | IShares Core vs. First Trust Managed |
| Federated Hermes vs. Valued Advisers Trust | Federated Hermes vs. Columbia Diversified Fixed | Federated Hermes vs. Principal Exchange Traded Funds | Federated Hermes vs. Doubleline Etf Trust |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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