Correlation Between Federated Kaufmann and New Economy

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Federated Kaufmann and New Economy 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 Kaufmann and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Kaufmann Large and New Economy Fund, you can compare the effects of market volatilities on Federated Kaufmann and New Economy 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 Kaufmann with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Kaufmann and New Economy.

Diversification Opportunities for Federated Kaufmann and New Economy

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between FEDERATED and New is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Large and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund and Federated Kaufmann 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 Kaufmann Large are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Federated Kaufmann i.e., Federated Kaufmann and New Economy go up and down completely randomly.

Pair Corralation between Federated Kaufmann and New Economy

Assuming the 90 days horizon Federated Kaufmann Large is expected to generate 1.08 times more return on investment than New Economy. However, Federated Kaufmann is 1.08 times more volatile than New Economy Fund. It trades about 0.38 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.2 per unit of risk. If you would invest  1,862  in Federated Kaufmann Large on September 1, 2024 and sell it today you would earn a total of  137.00  from holding Federated Kaufmann Large or generate 7.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

Federated Kaufmann Large  vs.  New Economy Fund

 Performance 
       Timeline  
Federated Kaufmann Large 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Federated Kaufmann Large are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Federated Kaufmann may actually be approaching a critical reversion point that can send shares even higher in December 2024.
New Economy Fund 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in New Economy Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, New Economy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Federated Kaufmann and New Economy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Federated Kaufmann and New Economy

The main advantage of trading using opposite Federated Kaufmann and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Kaufmann position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.
The idea behind Federated Kaufmann Large and New Economy Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

Other Complementary Tools

Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios