Correlation Between Metropolitan West and Federated Total
Can any of the company-specific risk be diversified away by investing in both Metropolitan West 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 Metropolitan West and Federated Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Federated Total Return, you can compare the effects of market volatilities on Metropolitan West 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 Metropolitan West with a short position of Federated Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Federated Total.
Diversification Opportunities for Metropolitan West and Federated Total
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Metropolitan and Federated is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High 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 Metropolitan West 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 Metropolitan West High 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 Metropolitan West i.e., Metropolitan West and Federated Total go up and down completely randomly.
Pair Corralation between Metropolitan West and Federated Total
Assuming the 90 days horizon Metropolitan West High is expected to generate 0.52 times more return on investment than Federated Total. However, Metropolitan West High is 1.91 times less risky than Federated Total. It trades about 0.09 of its potential returns per unit of risk. Federated Total Return is currently generating about -0.06 per unit of risk. If you would invest 931.00 in Metropolitan West High on August 26, 2024 and sell it today you would earn a total of 3.00 from holding Metropolitan West High or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West High vs. Federated Total Return
Performance |
| Timeline |
| Metropolitan West High |
| Federated Total Return |
Metropolitan West and Federated Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Federated Total
The main advantage of trading using opposite Metropolitan West and Federated Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West 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.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High | Metropolitan West vs. Metropolitan West Total |
| Federated Total vs. Pax Balanced Fund | Federated Total vs. Emerging Markets Portfolio | Federated Total vs. Hartford Capital Appreciation | Federated Total vs. Government Bond Fund |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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