Correlation Between Federated Pennsylvania and International Stock
Can any of the company-specific risk be diversified away by investing in both Federated Pennsylvania and International Stock 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 International Stock 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 International Stock Fund, you can compare the effects of market volatilities on Federated Pennsylvania and International Stock 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 International Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Pennsylvania and International Stock.
Diversification Opportunities for Federated Pennsylvania and International Stock
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FEDERATED and International is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Federated Pennsylvania Municip and International Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stock 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 International Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stock has no effect on the direction of Federated Pennsylvania i.e., Federated Pennsylvania and International Stock go up and down completely randomly.
Pair Corralation between Federated Pennsylvania and International Stock
Assuming the 90 days horizon Federated Pennsylvania Municipal is expected to generate 0.21 times more return on investment than International Stock. However, Federated Pennsylvania Municipal is 4.78 times less risky than International Stock. It trades about 0.12 of its potential returns per unit of risk. International Stock Fund is currently generating about -0.05 per unit of risk. If you would invest 985.00 in Federated Pennsylvania Municipal on September 3, 2024 and sell it today you would earn a total of 29.00 from holding Federated Pennsylvania Municipal or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Pennsylvania Municip vs. International Stock Fund
Performance |
| Timeline |
| Federated Pennsylvania |
| International Stock |
Federated Pennsylvania and International Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Pennsylvania and International Stock
The main advantage of trading using opposite Federated Pennsylvania and International Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Pennsylvania position performs unexpectedly, International Stock 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 International Stock will offset losses from the drop in International Stock's long position.The idea behind Federated Pennsylvania Municipal and International Stock Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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