Correlation Between Smallcap Fund and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund and Federated Mdt 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 Smallcap Fund and Federated Mdt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Fund Fka and Federated Mdt All, you can compare the effects of market volatilities on Smallcap Fund and Federated Mdt 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 Smallcap Fund with a short position of Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Federated Mdt.
Diversification Opportunities for Smallcap Fund and Federated Mdt
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Federated is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Federated Mdt All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt All and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt All has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Federated Mdt go up and down completely randomly.
Pair Corralation between Smallcap Fund and Federated Mdt
Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 1.07 times more return on investment than Federated Mdt. However, Smallcap Fund is 1.07 times more volatile than Federated Mdt All. It trades about 0.34 of its potential returns per unit of risk. Federated Mdt All is currently generating about 0.09 per unit of risk. If you would invest 2,549 in Smallcap Fund Fka on October 23, 2024 and sell it today you would earn a total of 161.00 from holding Smallcap Fund Fka or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Smallcap Fund Fka vs. Federated Mdt All
Performance |
| Timeline |
| Smallcap Fund Fka |
| Federated Mdt All |
Smallcap Fund and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Fund and Federated Mdt
The main advantage of trading using opposite Smallcap Fund and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund position performs unexpectedly, Federated Mdt 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 Mdt will offset losses from the drop in Federated Mdt's long position.| Smallcap Fund vs. Goldman Sachs Local | Smallcap Fund vs. Aqr Sustainable Long Short | Smallcap Fund vs. Kinetics Market Opportunities | Smallcap Fund vs. Franklin Emerging Market |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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