Correlation Between Federated Pennsylvania and American Beacon
Can any of the company-specific risk be diversified away by investing in both Federated Pennsylvania and American Beacon 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 American Beacon 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 American Beacon The, you can compare the effects of market volatilities on Federated Pennsylvania and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Pennsylvania and American Beacon.
Diversification Opportunities for Federated Pennsylvania and American Beacon
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and American is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Federated Pennsylvania Municip and American Beacon The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon has no effect on the direction of Federated Pennsylvania i.e., Federated Pennsylvania and American Beacon go up and down completely randomly.
Pair Corralation between Federated Pennsylvania and American Beacon
Assuming the 90 days horizon Federated Pennsylvania is expected to generate 2.62 times less return on investment than American Beacon. But when comparing it to its historical volatility, Federated Pennsylvania Municipal is 2.84 times less risky than American Beacon. It trades about 0.09 of its potential returns per unit of risk. American Beacon The is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,995 in American Beacon The on September 12, 2024 and sell it today you would earn a total of 387.00 from holding American Beacon The or generate 19.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Federated Pennsylvania Municip vs. American Beacon The
Performance |
| Timeline |
| Federated Pennsylvania |
| American Beacon |
Federated Pennsylvania and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Pennsylvania and American Beacon
The main advantage of trading using opposite Federated Pennsylvania and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Pennsylvania position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Federated Pennsylvania vs. Balanced Fund Investor | Federated Pennsylvania vs. Multimedia Portfolio Multimedia | Federated Pennsylvania vs. T Rowe Price | Federated Pennsylvania vs. L Abbett Fundamental |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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