Correlation Between Federated Pennsylvania and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both Federated Pennsylvania and Vanguard Extended 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 Vanguard Extended 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 Vanguard Extended Market, you can compare the effects of market volatilities on Federated Pennsylvania and Vanguard Extended 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 Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Pennsylvania and Vanguard Extended.
Diversification Opportunities for Federated Pennsylvania and Vanguard Extended
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and Vanguard is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Federated Pennsylvania Municip and Vanguard Extended Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended Market 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 Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended Market has no effect on the direction of Federated Pennsylvania i.e., Federated Pennsylvania and Vanguard Extended go up and down completely randomly.
Pair Corralation between Federated Pennsylvania and Vanguard Extended
Assuming the 90 days horizon Federated Pennsylvania Municipal is expected to generate 0.13 times more return on investment than Vanguard Extended. However, Federated Pennsylvania Municipal is 7.43 times less risky than Vanguard Extended. It trades about 0.39 of its potential returns per unit of risk. Vanguard Extended Market is currently generating about 0.01 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Pennsylvania Municip vs. Vanguard Extended Market
Performance |
| Timeline |
| Federated Pennsylvania |
| Vanguard Extended Market |
Federated Pennsylvania and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Pennsylvania and Vanguard Extended
The main advantage of trading using opposite Federated Pennsylvania and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Pennsylvania position performs unexpectedly, Vanguard Extended 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 Vanguard Extended will offset losses from the drop in Vanguard Extended'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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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