Correlation Between Locorr Longshort and Federated Short-intermedia
Can any of the company-specific risk be diversified away by investing in both Locorr Longshort and Federated Short-intermedia 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 Locorr Longshort and Federated Short-intermedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Locorr Longshort Modities and Federated Short Intermediate Duration, you can compare the effects of market volatilities on Locorr Longshort and Federated Short-intermedia 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 Locorr Longshort with a short position of Federated Short-intermedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Locorr Longshort and Federated Short-intermedia.
Diversification Opportunities for Locorr Longshort and Federated Short-intermedia
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Locorr and Federated is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Longshort Modities and Federated Short Intermediate D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short-intermedia and Locorr Longshort 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 Locorr Longshort Modities are associated (or correlated) with Federated Short-intermedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short-intermedia has no effect on the direction of Locorr Longshort i.e., Locorr Longshort and Federated Short-intermedia go up and down completely randomly.
Pair Corralation between Locorr Longshort and Federated Short-intermedia
Assuming the 90 days horizon Locorr Longshort Modities is expected to under-perform the Federated Short-intermedia. In addition to that, Locorr Longshort is 2.68 times more volatile than Federated Short Intermediate Duration. It trades about -0.05 of its total potential returns per unit of risk. Federated Short Intermediate Duration is currently generating about 0.13 per unit of volatility. If you would invest 934.00 in Federated Short Intermediate Duration on September 3, 2024 and sell it today you would earn a total of 69.00 from holding Federated Short Intermediate Duration or generate 7.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Locorr Longshort Modities vs. Federated Short Intermediate D
Performance |
| Timeline |
| Locorr Longshort Modities |
| Federated Short-intermedia |
Locorr Longshort and Federated Short-intermedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Locorr Longshort and Federated Short-intermedia
The main advantage of trading using opposite Locorr Longshort and Federated Short-intermedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Locorr Longshort position performs unexpectedly, Federated Short-intermedia 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 Short-intermedia will offset losses from the drop in Federated Short-intermedia's long position.| Locorr Longshort vs. First American Funds | Locorr Longshort vs. Matson Money Equity | Locorr Longshort vs. Lord Abbett Emerging | Locorr Longshort vs. Janus 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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