Correlation Between Federated Equity and Fundamental Large
Can any of the company-specific risk be diversified away by investing in both Federated Equity and Fundamental Large 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 Fundamental Large 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 Fundamental Large Cap, you can compare the effects of market volatilities on Federated Equity and Fundamental Large 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 Fundamental Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Equity and Fundamental Large.
Diversification Opportunities for Federated Equity and Fundamental Large
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Fundamental is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Federated Equity Income and Fundamental Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Large Cap 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 Fundamental Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Large Cap has no effect on the direction of Federated Equity i.e., Federated Equity and Fundamental Large go up and down completely randomly.
Pair Corralation between Federated Equity and Fundamental Large
Assuming the 90 days horizon Federated Equity Income is expected to generate 0.78 times more return on investment than Fundamental Large. However, Federated Equity Income is 1.28 times less risky than Fundamental Large. It trades about 0.2 of its potential returns per unit of risk. Fundamental Large Cap is currently generating about 0.0 per unit of risk. If you would invest 2,183 in Federated Equity Income on November 30, 2024 and sell it today you would earn a total of 114.00 from holding Federated Equity Income or generate 5.22% 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. Fundamental Large Cap
Performance |
| Timeline |
| Federated Equity Income |
| Fundamental Large Cap |
Federated Equity and Fundamental Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Equity and Fundamental Large
The main advantage of trading using opposite Federated Equity and Fundamental Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Equity position performs unexpectedly, Fundamental Large 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 Fundamental Large will offset losses from the drop in Fundamental Large's long position.| Federated Equity vs. Dws Emerging Markets | Federated Equity vs. Artisan Developing World | Federated Equity vs. Maryland Short Term Tax Free | Federated Equity vs. Jhancock Diversified Macro |
| Fundamental Large vs. Regional Bank Fund | Fundamental Large vs. Regional Bank Fund | Fundamental Large vs. Multimanager Lifestyle Moderate | Fundamental Large vs. Multimanager Lifestyle Balanced |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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