Correlation Between Federated Pennsylvania and American Funds
Can any of the company-specific risk be diversified away by investing in both Federated Pennsylvania and American Funds 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 Funds 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 Funds Inflation, you can compare the effects of market volatilities on Federated Pennsylvania and American Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Pennsylvania and American Funds.
Diversification Opportunities for Federated Pennsylvania and American Funds
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and American is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Federated Pennsylvania Municip and American Funds Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inflation 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Inflation has no effect on the direction of Federated Pennsylvania i.e., Federated Pennsylvania and American Funds go up and down completely randomly.
Pair Corralation between Federated Pennsylvania and American Funds
Assuming the 90 days horizon Federated Pennsylvania Municipal is expected to generate 0.56 times more return on investment than American Funds. However, Federated Pennsylvania Municipal is 1.78 times less risky than American Funds. It trades about 0.39 of its potential returns per unit of risk. American Funds Inflation is currently generating about 0.13 per unit of risk. If you would invest 1,005 in Federated Pennsylvania Municipal on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Federated Pennsylvania Municipal or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Pennsylvania Municip vs. American Funds Inflation
Performance |
| Timeline |
| Federated Pennsylvania |
| American Funds Inflation |
Federated Pennsylvania and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Pennsylvania and American Funds
The main advantage of trading using opposite Federated Pennsylvania and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Pennsylvania position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Vanguard Inflation Protected Securities | American Funds vs. Vanguard Inflation Protected Securities | American Funds vs. American Funds Inflation |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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