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 Mdt, 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
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Versatile and Federated is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and Federated Hermes Mdt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Mdt 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 Mdt 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 is expected to generate 1.51 times less return on investment than Federated Hermes. But when comparing it to its historical volatility, Versatile Bond Portfolio is 2.73 times less risky than Federated Hermes. It trades about 0.18 of its potential returns per unit of risk. Federated Hermes Mdt is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,666 in Federated Hermes Mdt on September 13, 2024 and sell it today you would earn a total of 343.00 from holding Federated Hermes Mdt or generate 20.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. Federated Hermes Mdt
Performance |
| Timeline |
| Versatile Bond Portfolio |
| Federated Hermes Mdt |
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. Multisector Bond Sma | Federated Hermes vs. Blrc Sgy Mnp | Federated Hermes vs. Versatile Bond Portfolio | Federated Hermes vs. Alliancebernstein Bond |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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