Correlation Between NYSE Composite and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federated Hermes 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 Hermes 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 Hermes ETF, you can compare the effects of market volatilities on NYSE Composite and Federated Hermes 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 Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federated Hermes.
Diversification Opportunities for NYSE Composite and Federated Hermes
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Federated is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federated Hermes ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes ETF 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 Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes ETF has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federated Hermes go up and down completely randomly.
Pair Corralation between NYSE Composite and Federated Hermes
Assuming the 90 days trading horizon NYSE Composite is expected to generate 207.37 times less return on investment than Federated Hermes. But when comparing it to its historical volatility, NYSE Composite is 145.35 times less risky than Federated Hermes. It trades about 0.08 of its potential returns per unit of risk. Federated Hermes ETF is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Federated Hermes ETF on September 3, 2024 and sell it today you would earn a total of 2,893 from holding Federated Hermes ETF or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 17.78% |
| Values | Daily Returns |
NYSE Composite vs. Federated Hermes ETF
Performance |
| Timeline |
NYSE Composite and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Federated Hermes ETF
Pair trading matchups for Federated Hermes
Pair Trading with NYSE Composite and Federated Hermes
The main advantage of trading using opposite NYSE Composite and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Federated Hermes vs. Global X Funds | Federated Hermes vs. Dell Technologies | Federated Hermes vs. Juniper Networks | Federated Hermes vs. HUMANA INC |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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