Correlation Between OFS Capital and Federated Premier
Can any of the company-specific risk be diversified away by investing in both OFS Capital 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 OFS Capital and Federated Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OFS Capital Corp and Federated Premier Municipal, you can compare the effects of market volatilities on OFS Capital 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 OFS Capital with a short position of Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFS Capital and Federated Premier.
Diversification Opportunities for OFS Capital and Federated Premier
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OFS and Federated is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding OFS Capital Corp and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and OFS Capital 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 OFS Capital Corp 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 OFS Capital i.e., OFS Capital and Federated Premier go up and down completely randomly.
Pair Corralation between OFS Capital and Federated Premier
Considering the 90-day investment horizon OFS Capital is expected to generate 3.4 times less return on investment than Federated Premier. In addition to that, OFS Capital is 2.57 times more volatile than Federated Premier Municipal. It trades about 0.01 of its total potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.05 per unit of volatility. If you would invest 987.00 in Federated Premier Municipal on September 4, 2024 and sell it today you would earn a total of 151.00 from holding Federated Premier Municipal or generate 15.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OFS Capital Corp vs. Federated Premier Municipal
Performance |
| Timeline |
| OFS Capital Corp |
| Federated Premier |
OFS Capital and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFS Capital and Federated Premier
The main advantage of trading using opposite OFS Capital and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Capital 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.| OFS Capital vs. Stellus Capital Investment | OFS Capital vs. Fidus Investment Corp | OFS Capital vs. Monroe Capital Corp | OFS Capital vs. New Mountain Finance |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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