Correlation Between Federated Pennsylvania and Aberdeen Short
Can any of the company-specific risk be diversified away by investing in both Federated Pennsylvania and Aberdeen Short 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 Pennsylvania and Aberdeen Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Pennsylvania Municipal and Aberdeen Short Duration, you can compare the effects of market volatilities on Federated Pennsylvania and Aberdeen Short 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 Pennsylvania with a short position of Aberdeen Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Pennsylvania and Aberdeen Short.
Diversification Opportunities for Federated Pennsylvania and Aberdeen Short
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FEDERATED and Aberdeen is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Federated Pennsylvania Municip and Aberdeen Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Short Duration and Federated Pennsylvania 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 Pennsylvania Municipal are associated (or correlated) with Aberdeen Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Short Duration has no effect on the direction of Federated Pennsylvania i.e., Federated Pennsylvania and Aberdeen Short go up and down completely randomly.
Pair Corralation between Federated Pennsylvania and Aberdeen Short
Assuming the 90 days horizon Federated Pennsylvania is expected to generate 1.06 times less return on investment than Aberdeen Short. In addition to that, Federated Pennsylvania is 1.23 times more volatile than Aberdeen Short Duration. It trades about 0.13 of its total potential returns per unit of risk. Aberdeen Short Duration is currently generating about 0.17 per unit of volatility. If you would invest 898.00 in Aberdeen Short Duration on September 5, 2024 and sell it today you would earn a total of 30.00 from holding Aberdeen Short Duration or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Federated Pennsylvania Municip vs. Aberdeen Short Duration
Performance |
| Timeline |
| Federated Pennsylvania |
| Aberdeen Short Duration |
Federated Pennsylvania and Aberdeen Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Pennsylvania and Aberdeen Short
The main advantage of trading using opposite Federated Pennsylvania and Aberdeen Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Pennsylvania position performs unexpectedly, Aberdeen Short 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 Aberdeen Short will offset losses from the drop in Aberdeen Short's long position.| Federated Pennsylvania vs. Federated Emerging Market | Federated Pennsylvania vs. Federated Mdt All | Federated Pennsylvania vs. Federated Mdt Balanced | Federated Pennsylvania vs. Federated Global Allocation |
| Aberdeen Short vs. Aberdeen Emerging Markets | Aberdeen Short vs. Aberdeen Emerging Markets | Aberdeen Short vs. Aberdeen Emerging Markets | Aberdeen Short vs. Aberdeen Gbl Eq |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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