Correlation Between Northeast Investors and Federated High
Can any of the company-specific risk be diversified away by investing in both Northeast Investors and Federated High 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 Northeast Investors and Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northeast Investors Trust and Federated High Yield, you can compare the effects of market volatilities on Northeast Investors and Federated High 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 Northeast Investors with a short position of Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northeast Investors and Federated High.
Diversification Opportunities for Northeast Investors and Federated High
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northeast and Federated is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Investors Trust and Federated High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Yield and Northeast Investors 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 Northeast Investors Trust are associated (or correlated) with Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Yield has no effect on the direction of Northeast Investors i.e., Northeast Investors and Federated High go up and down completely randomly.
Pair Corralation between Northeast Investors and Federated High
Assuming the 90 days horizon Northeast Investors is expected to generate 1.45 times less return on investment than Federated High. In addition to that, Northeast Investors is 1.11 times more volatile than Federated High Yield. It trades about 0.14 of its total potential returns per unit of risk. Federated High Yield is currently generating about 0.22 per unit of volatility. If you would invest 639.00 in Federated High Yield on August 27, 2024 and sell it today you would earn a total of 5.00 from holding Federated High Yield or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northeast Investors Trust vs. Federated High Yield
Performance |
| Timeline |
| Northeast Investors Trust |
| Federated High Yield |
Northeast Investors and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northeast Investors and Federated High
The main advantage of trading using opposite Northeast Investors and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northeast Investors position performs unexpectedly, Federated High 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 High will offset losses from the drop in Federated High's long position.| Northeast Investors vs. Guggenheim Large Cap | Northeast Investors vs. Vanguard Windsor Fund | Northeast Investors vs. Goldman Sachs Tax Advantaged | Northeast Investors vs. Vanguard Explorer Fund |
| Federated High vs. Janus High Yield Fund | Federated High vs. Northeast Investors Trust | Federated High vs. High Yield Fund Investor | Federated High vs. Ab Sustainable Thematic |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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