Correlation Between Emerging Markets and Federated Total
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Federated Total 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 Emerging Markets and Federated Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Portfolio and Federated Total Return, you can compare the effects of market volatilities on Emerging Markets and Federated Total 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 Emerging Markets with a short position of Federated Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Federated Total.
Diversification Opportunities for Emerging Markets and Federated Total
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Emerging and FEDERATED is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Portfolio and Federated Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Total Return and Emerging Markets 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 Emerging Markets Portfolio are associated (or correlated) with Federated Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Total Return has no effect on the direction of Emerging Markets i.e., Emerging Markets and Federated Total go up and down completely randomly.
Pair Corralation between Emerging Markets and Federated Total
Assuming the 90 days horizon Emerging Markets Portfolio is expected to under-perform the Federated Total. In addition to that, Emerging Markets is 4.0 times more volatile than Federated Total Return. It trades about -0.03 of its total potential returns per unit of risk. Federated Total Return is currently generating about 0.17 per unit of volatility. If you would invest 931.00 in Federated Total Return on December 16, 2024 and sell it today you would earn a total of 10.00 from holding Federated Total Return or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Portfolio vs. Federated Total Return
Performance |
| Timeline |
| Emerging Markets Por |
| Federated Total Return |
Emerging Markets and Federated Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Federated Total
The main advantage of trading using opposite Emerging Markets and Federated Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Federated Total 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 Total will offset losses from the drop in Federated Total's long position.| Emerging Markets vs. Prudential Government Money | ||
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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