Correlation Between NYSE Composite and Federated Bond
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federated Bond 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 NYSE Composite and Federated Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Federated Bond Fund, you can compare the effects of market volatilities on NYSE Composite and Federated Bond 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 NYSE Composite with a short position of Federated Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federated Bond.
Diversification Opportunities for NYSE Composite and Federated Bond
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Federated is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federated Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Bond and NYSE Composite 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 NYSE Composite are associated (or correlated) with Federated Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Bond has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federated Bond go up and down completely randomly.
Pair Corralation between NYSE Composite and Federated Bond
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.87 times less return on investment than Federated Bond. In addition to that, NYSE Composite is 1.85 times more volatile than Federated Bond Fund. It trades about 0.02 of its total potential returns per unit of risk. Federated Bond Fund is currently generating about 0.17 per unit of volatility. If you would invest 833.00 in Federated Bond Fund on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Federated Bond Fund or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Federated Bond Fund
Performance |
| Timeline |
NYSE Composite and Federated Bond Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Federated Bond Fund
Pair trading matchups for Federated Bond
Pair Trading with NYSE Composite and Federated Bond
The main advantage of trading using opposite NYSE Composite and Federated Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federated Bond 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 Bond will offset losses from the drop in Federated Bond's long position.| NYSE Composite vs. Boston Beer | NYSE Composite vs. Freedom Bank of | NYSE Composite vs. KeyCorp | NYSE Composite vs. LithiumBank Resources Corp |
| Federated Bond vs. Federated Emerging Market | Federated Bond vs. Federated Mdt All | Federated Bond vs. Federated Mdt Balanced | Federated Bond vs. Federated Global Allocation |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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