Correlation Between Federated Ohio and American Funds
Can any of the company-specific risk be diversified away by investing in both Federated Ohio and American Funds 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 Federated Ohio and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Ohio Municipal and American Funds 2010, you can compare the effects of market volatilities on Federated Ohio and American Funds 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 Federated Ohio with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ohio and American Funds.
Diversification Opportunities for Federated Ohio and American Funds
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FEDERATED and American is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ohio Municipal and American Funds 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2010 and Federated Ohio 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 Federated Ohio Municipal are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2010 has no effect on the direction of Federated Ohio i.e., Federated Ohio and American Funds go up and down completely randomly.
Pair Corralation between Federated Ohio and American Funds
Assuming the 90 days horizon Federated Ohio is expected to generate 1.47 times less return on investment than American Funds. In addition to that, Federated Ohio is 1.07 times more volatile than American Funds 2010. It trades about 0.17 of its total potential returns per unit of risk. American Funds 2010 is currently generating about 0.26 per unit of volatility. If you would invest 1,213 in American Funds 2010 on September 1, 2024 and sell it today you would earn a total of 19.00 from holding American Funds 2010 or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Ohio Municipal vs. American Funds 2010
Performance |
| Timeline |
| Federated Ohio Municipal |
| American Funds 2010 |
Federated Ohio and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ohio and American Funds
The main advantage of trading using opposite Federated Ohio and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ohio position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Federated Ohio vs. Federated Emerging Market | Federated Ohio vs. Federated Mdt All | Federated Ohio vs. Federated Mdt Balanced | Federated Ohio vs. Federated Global Allocation |
| American Funds vs. Bbh Intermediate Municipal | American Funds vs. Ab Impact Municipal | American Funds vs. Federated Ohio Municipal | American Funds vs. Multisector Bond Sma |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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