Correlation Between NYSE Composite and Federated Premier
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federated Premier 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 Premier 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 Premier Municipal, you can compare the effects of market volatilities on NYSE Composite and Federated Premier 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 Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federated Premier.
Diversification Opportunities for NYSE Composite and Federated Premier
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Federated is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier 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 Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federated Premier go up and down completely randomly.
Pair Corralation between NYSE Composite and Federated Premier
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.89 times more return on investment than Federated Premier. However, NYSE Composite is 1.12 times less risky than Federated Premier. It trades about 0.21 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about -0.1 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 27, 2024 and sell it today you would earn a total of 57,378 from holding NYSE Composite or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Federated Premier Municipal
Performance |
| Timeline |
NYSE Composite and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Federated Premier Municipal
Pair trading matchups for Federated Premier
Pair Trading with NYSE Composite and Federated Premier
The main advantage of trading using opposite NYSE Composite and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federated Premier 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 Premier will offset losses from the drop in Federated Premier's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Federated Premier vs. Dws Strategic Municipal | Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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