Correlation Between Floating Rate and Federated Premier
Can any of the company-specific risk be diversified away by investing in both Floating Rate and Federated Premier 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 Floating Rate and Federated Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and Federated Premier Municipal, you can compare the effects of market volatilities on Floating Rate and Federated Premier 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 Floating Rate with a short position of Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and Federated Premier.
Diversification Opportunities for Floating Rate and Federated Premier
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Floating and Federated is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and Floating Rate 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 Floating Rate Fund are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Floating Rate i.e., Floating Rate and Federated Premier go up and down completely randomly.
Pair Corralation between Floating Rate and Federated Premier
Assuming the 90 days horizon Floating Rate Fund is expected to under-perform the Federated Premier. But the mutual fund apears to be less risky and, when comparing its historical volatility, Floating Rate Fund is 11.53 times less risky than Federated Premier. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Federated Premier Municipal is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,095 in Federated Premier Municipal on November 4, 2024 and sell it today you would earn a total of 15.00 from holding Federated Premier Municipal or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Floating Rate Fund vs. Federated Premier Municipal
Performance |
| Timeline |
| Floating Rate |
| Federated Premier |
Floating Rate and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and Federated Premier
The main advantage of trading using opposite Floating Rate and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate position performs unexpectedly, Federated Premier 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 Premier will offset losses from the drop in Federated Premier's long position.| Floating Rate vs. Needham Aggressive Growth | Floating Rate vs. Barings High Yield | Floating Rate vs. Chartwell Short Duration | Floating Rate vs. Ab High Income |
| Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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