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 SP 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 SP 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 SP 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
Considering the 90-day investment horizon IShares Core is expected to generate 101.25 times less return on investment than Federated Hermes. But when comparing it to its historical volatility, iShares Core SP is 127.54 times less risky than Federated Hermes. It trades about 0.14 of its potential returns per unit of risk. Federated Hermes ETF is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Federated Hermes ETF on September 1, 2024 and sell it today you would earn a total of 2,897 from holding Federated Hermes ETF or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 69.84% |
| Values | Daily Returns |
iShares Core SP vs. Federated Hermes ETF
Performance |
| Timeline |
| iShares Core SP |
| 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. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
| Federated Hermes vs. Vanguard Total Stock | Federated Hermes vs. SPDR SP 500 | Federated Hermes vs. iShares Core SP | Federated Hermes vs. Vanguard Dividend Appreciation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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