Correlation Between Versatile Bond and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Versatile Bond and Federated Hermes 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 Versatile Bond and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versatile Bond Portfolio and Federated Hermes Emerging, you can compare the effects of market volatilities on Versatile Bond and Federated Hermes 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 Versatile Bond with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versatile Bond and Federated Hermes.
Diversification Opportunities for Versatile Bond and Federated Hermes
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Versatile and Federated is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and Federated Hermes Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Emerging and Versatile Bond 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 Versatile Bond Portfolio are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Emerging has no effect on the direction of Versatile Bond i.e., Versatile Bond and Federated Hermes go up and down completely randomly.
Pair Corralation between Versatile Bond and Federated Hermes
Assuming the 90 days horizon Versatile Bond Portfolio is expected to generate 0.12 times more return on investment than Federated Hermes. However, Versatile Bond Portfolio is 8.16 times less risky than Federated Hermes. It trades about 0.04 of its potential returns per unit of risk. Federated Hermes Emerging is currently generating about -0.09 per unit of risk. If you would invest 6,406 in Versatile Bond Portfolio on September 13, 2024 and sell it today you would earn a total of 13.00 from holding Versatile Bond Portfolio or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. Federated Hermes Emerging
Performance |
| Timeline |
| Versatile Bond Portfolio |
| Federated Hermes Emerging |
Versatile Bond and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versatile Bond and Federated Hermes
The main advantage of trading using opposite Versatile Bond and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.| Versatile Bond vs. Short Term Treasury Portfolio | Versatile Bond vs. Aggressive Growth Portfolio | Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Thompson Bond Fund |
| Federated Hermes vs. Aqr Small Cap | Federated Hermes vs. Touchstone Small Cap | Federated Hermes vs. Ab Small Cap | Federated Hermes vs. Glg Intl Small |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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