Correlation Between Federated Equity and Federated Global
Can any of the company-specific risk be diversified away by investing in both Federated Equity and Federated Global 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 Global 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 Global Allocation, you can compare the effects of market volatilities on Federated Equity and Federated Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Equity and Federated Global.
Diversification Opportunities for Federated Equity and Federated Global
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Federated is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Federated Equity Income and Federated Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Global All 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Global All has no effect on the direction of Federated Equity i.e., Federated Equity and Federated Global go up and down completely randomly.
Pair Corralation between Federated Equity and Federated Global
Assuming the 90 days horizon Federated Equity Income is expected to generate 1.49 times more return on investment than Federated Global. However, Federated Equity is 1.49 times more volatile than Federated Global Allocation. It trades about 0.06 of its potential returns per unit of risk. Federated Global Allocation is currently generating about 0.08 per unit of risk. If you would invest 2,152 in Federated Equity Income on August 30, 2024 and sell it today you would earn a total of 494.00 from holding Federated Equity Income or generate 22.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Equity Income vs. Federated Global Allocation
Performance |
| Timeline |
| Federated Equity Income |
| Federated Global All |
Federated Equity and Federated Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Equity and Federated Global
The main advantage of trading using opposite Federated Equity and Federated Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Equity position performs unexpectedly, Federated Global 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 Global will offset losses from the drop in Federated Global's long position.| Federated Equity vs. Dodge Cox Stock | Federated Equity vs. American Mutual Fund | Federated Equity vs. American Funds American | Federated Equity vs. American Funds American |
| Federated Global vs. Federated Mdt Large | Federated Global vs. Federated Equity Income | Federated Global vs. Federated Max Cap Index | Federated Global vs. Federated Kaufmann 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |