Correlation Between Federated Equity and Federated International
Can any of the company-specific risk be diversified away by investing in both Federated Equity and Federated International 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 Equity and Federated International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Equity Income and Federated International Leaders, you can compare the effects of market volatilities on Federated Equity and Federated International 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 Equity with a short position of Federated International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Equity and Federated International.
Diversification Opportunities for Federated Equity and Federated International
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and Federated is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Federated Equity Income and Federated International Leader in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated International and Federated Equity 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 Equity Income are associated (or correlated) with Federated International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated International has no effect on the direction of Federated Equity i.e., Federated Equity and Federated International go up and down completely randomly.
Pair Corralation between Federated Equity and Federated International
Assuming the 90 days horizon Federated Equity Income is expected to generate 0.9 times more return on investment than Federated International. However, Federated Equity Income is 1.11 times less risky than Federated International. It trades about 0.05 of its potential returns per unit of risk. Federated International Leaders is currently generating about 0.03 per unit of risk. If you would invest 2,196 in Federated Equity Income on September 3, 2024 and sell it today you would earn a total of 456.00 from holding Federated Equity Income or generate 20.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Equity Income vs. Federated International Leader
Performance |
| Timeline |
| Federated Equity Income |
| Federated International |
Federated Equity and Federated International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Equity and Federated International
The main advantage of trading using opposite Federated Equity and Federated International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Equity position performs unexpectedly, Federated International 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 International will offset losses from the drop in Federated International's long position.| Federated Equity vs. Financials Ultrasector Profund | Federated Equity vs. Gabelli Global Financial | Federated Equity vs. 1919 Financial Services | Federated Equity vs. Icon Financial Fund |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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