Correlation Between Multisector Bond and Federated Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Federated Pennsylvania 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 Pennsylvania 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 Pennsylvania Municipal, you can compare the effects of market volatilities on Multisector Bond and Federated Pennsylvania 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 Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Federated Pennsylvania.
Diversification Opportunities for Multisector Bond and Federated Pennsylvania
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Multisector and Federated is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Federated Pennsylvania Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Pennsylvania 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 Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Pennsylvania has no effect on the direction of Multisector Bond i.e., Multisector Bond and Federated Pennsylvania go up and down completely randomly.
Pair Corralation between Multisector Bond and Federated Pennsylvania
Assuming the 90 days horizon Multisector Bond Sma is expected to generate 1.96 times more return on investment than Federated Pennsylvania. However, Multisector Bond is 1.96 times more volatile than Federated Pennsylvania Municipal. It trades about 0.13 of its potential returns per unit of risk. Federated Pennsylvania Municipal is currently generating about 0.09 per unit of risk. If you would invest 1,141 in Multisector Bond Sma on September 12, 2024 and sell it today you would earn a total of 235.00 from holding Multisector Bond Sma or generate 20.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multisector Bond Sma vs. Federated Pennsylvania Municip
Performance |
| Timeline |
| Multisector Bond Sma |
| Federated Pennsylvania |
Multisector Bond and Federated Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and Federated Pennsylvania
The main advantage of trading using opposite Multisector Bond and Federated Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond position performs unexpectedly, Federated Pennsylvania 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 Pennsylvania will offset losses from the drop in Federated Pennsylvania's long position.| Multisector Bond vs. SCOR PK | Multisector Bond vs. Morningstar Unconstrained Allocation | Multisector Bond vs. Thrivent High Yield | Multisector Bond vs. Via Renewables |
| Federated Pennsylvania vs. Balanced Fund Investor | Federated Pennsylvania vs. Multimedia Portfolio Multimedia | Federated Pennsylvania vs. T Rowe Price | Federated Pennsylvania vs. L Abbett Fundamental |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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