Correlation Between Long Term and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Long Term and Federated Strategic 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 Long Term and Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Long Term Government Fund and Federated Strategic Income, you can compare the effects of market volatilities on Long Term and Federated Strategic 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 Long Term with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Term and Federated Strategic.
Diversification Opportunities for Long Term and Federated Strategic
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Long and Federated is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Long Term Government Fund and Federated Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic and Long Term 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 Long Term Government Fund are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic has no effect on the direction of Long Term i.e., Long Term and Federated Strategic go up and down completely randomly.
Pair Corralation between Long Term and Federated Strategic
Assuming the 90 days horizon Long Term Government Fund is expected to under-perform the Federated Strategic. In addition to that, Long Term is 3.6 times more volatile than Federated Strategic Income. It trades about -0.02 of its total potential returns per unit of risk. Federated Strategic Income is currently generating about 0.07 per unit of volatility. If you would invest 825.00 in Federated Strategic Income on September 13, 2024 and sell it today you would earn a total of 6.00 from holding Federated Strategic Income or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Long Term Government Fund vs. Federated Strategic Income
Performance |
| Timeline |
| Long Term Government |
| Federated Strategic |
Long Term and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long Term and Federated Strategic
The main advantage of trading using opposite Long Term and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long Term position performs unexpectedly, Federated Strategic 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 Federated Strategic will offset losses from the drop in Federated Strategic's long position.| Long Term vs. Pimco Rae Worldwide | Long Term vs. Pimco Foreign Bond | Long Term vs. Pimco Preferred And | Long Term vs. Pimco Fundamental Advantage |
| Federated Strategic vs. Federated Hermes Mdt | Federated Strategic vs. Federated Mdt Large | Federated Strategic vs. Federated High Income | Federated Strategic vs. Federated Hermes Sdg |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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