Correlation Between Federated Ohio and Broad Cap
Can any of the company-specific risk be diversified away by investing in both Federated Ohio and Broad Cap 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 Broad Cap 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 Broad Cap Value, you can compare the effects of market volatilities on Federated Ohio and Broad Cap 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 Broad Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ohio and Broad Cap.
Diversification Opportunities for Federated Ohio and Broad Cap
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FEDERATED and Broad is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ohio Municipal and Broad Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broad Cap Value 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 Broad Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broad Cap Value has no effect on the direction of Federated Ohio i.e., Federated Ohio and Broad Cap go up and down completely randomly.
Pair Corralation between Federated Ohio and Broad Cap
Assuming the 90 days horizon Federated Ohio is expected to generate 5.03 times less return on investment than Broad Cap. But when comparing it to its historical volatility, Federated Ohio Municipal is 2.79 times less risky than Broad Cap. It trades about 0.18 of its potential returns per unit of risk. Broad Cap Value is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,523 in Broad Cap Value on September 2, 2024 and sell it today you would earn a total of 90.00 from holding Broad Cap Value or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Ohio Municipal vs. Broad Cap Value
Performance |
| Timeline |
| Federated Ohio Municipal |
| Broad Cap Value |
Federated Ohio and Broad Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ohio and Broad Cap
The main advantage of trading using opposite Federated Ohio and Broad Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ohio position performs unexpectedly, Broad Cap 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 Broad Cap will offset losses from the drop in Broad Cap's 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 |
| Broad Cap vs. Mid Cap Index | Broad Cap vs. Valic Company I | Broad Cap vs. Mid Cap Strategic | Broad Cap vs. Valic Company I |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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