Correlation Between Federated Ohio and Consumer Products
Can any of the company-specific risk be diversified away by investing in both Federated Ohio and Consumer Products 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 Consumer Products 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 Consumer Products Fund, you can compare the effects of market volatilities on Federated Ohio and Consumer Products 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 Consumer Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ohio and Consumer Products.
Diversification Opportunities for Federated Ohio and Consumer Products
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEDERATED and Consumer is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ohio Municipal and Consumer Products Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Products 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 Consumer Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Products has no effect on the direction of Federated Ohio i.e., Federated Ohio and Consumer Products go up and down completely randomly.
Pair Corralation between Federated Ohio and Consumer Products
Assuming the 90 days horizon Federated Ohio is expected to generate 3.28 times less return on investment than Consumer Products. But when comparing it to its historical volatility, Federated Ohio Municipal is 6.7 times less risky than Consumer Products. It trades about 0.09 of its potential returns per unit of risk. Consumer Products Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,856 in Consumer Products Fund on September 2, 2024 and sell it today you would earn a total of 505.00 from holding Consumer Products Fund or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Ohio Municipal vs. Consumer Products Fund
Performance |
| Timeline |
| Federated Ohio Municipal |
| Consumer Products |
Federated Ohio and Consumer Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ohio and Consumer Products
The main advantage of trading using opposite Federated Ohio and Consumer Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ohio position performs unexpectedly, Consumer Products 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 Consumer Products will offset losses from the drop in Consumer Products' 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 |
| Consumer Products vs. Basic Materials Fund | Consumer Products vs. Biotechnology Fund Class | Consumer Products vs. Consumer Products Fund | Consumer Products vs. Health Care Fund |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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