Correlation Between Multisector Bond and Federated Mortgage
Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Federated Mortgage 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 Multisector Bond and Federated Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Federated Mortgage Fund, you can compare the effects of market volatilities on Multisector Bond and Federated Mortgage 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 Multisector Bond with a short position of Federated Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Federated Mortgage.
Diversification Opportunities for Multisector Bond and Federated Mortgage
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Multisector and Federated is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Federated Mortgage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mortgage and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Federated Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mortgage has no effect on the direction of Multisector Bond i.e., Multisector Bond and Federated Mortgage go up and down completely randomly.
Pair Corralation between Multisector Bond and Federated Mortgage
Assuming the 90 days horizon Multisector Bond Sma is expected to generate 1.07 times more return on investment than Federated Mortgage. However, Multisector Bond is 1.07 times more volatile than Federated Mortgage Fund. It trades about 0.12 of its potential returns per unit of risk. Federated Mortgage Fund is currently generating about 0.07 per unit of risk. If you would invest 1,354 in Multisector Bond Sma on October 25, 2024 and sell it today you would earn a total of 9.00 from holding Multisector Bond Sma or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Multisector Bond Sma vs. Federated Mortgage Fund
Performance |
| Timeline |
| Multisector Bond Sma |
| Federated Mortgage |
Multisector Bond and Federated Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and Federated Mortgage
The main advantage of trading using opposite Multisector Bond and Federated Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond position performs unexpectedly, Federated Mortgage 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 Mortgage will offset losses from the drop in Federated Mortgage's long position.| Multisector Bond vs. Goldman Sachs Short Term | Multisector Bond vs. Vy T Rowe | Multisector Bond vs. Valic Company I | Multisector Bond vs. Lord Abbett Diversified |
| Federated Mortgage vs. Putnam Convertible Securities | Federated Mortgage vs. Allianzgi Convertible Income | Federated Mortgage vs. Fidelity Sai Convertible | Federated Mortgage vs. Virtus Convertible |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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