Correlation Between Tax-exempt Bond and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Tax-exempt 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 Tax-exempt 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 Tax Exempt Bond Fund and Federated Hermes Inflation, you can compare the effects of market volatilities on Tax-exempt 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 Tax-exempt Bond with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-exempt Bond and Federated Hermes.
Diversification Opportunities for Tax-exempt Bond and Federated Hermes
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tax-exempt and Federated is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tax Exempt Bond Fund and Federated Hermes Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Inf and Tax-exempt 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 Tax Exempt Bond Fund 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 Inf has no effect on the direction of Tax-exempt Bond i.e., Tax-exempt Bond and Federated Hermes go up and down completely randomly.
Pair Corralation between Tax-exempt Bond and Federated Hermes
Assuming the 90 days horizon Tax Exempt Bond Fund is expected to generate 1.07 times more return on investment than Federated Hermes. However, Tax-exempt Bond is 1.07 times more volatile than Federated Hermes Inflation. It trades about 0.15 of its potential returns per unit of risk. Federated Hermes Inflation is currently generating about 0.06 per unit of risk. If you would invest 673.00 in Tax Exempt Bond Fund on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Tax Exempt Bond Fund or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tax Exempt Bond Fund vs. Federated Hermes Inflation
Performance |
| Timeline |
| Tax Exempt Bond |
| Federated Hermes Inf |
Tax-exempt Bond and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tax-exempt Bond and Federated Hermes
The main advantage of trading using opposite Tax-exempt Bond and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax-exempt 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.| Tax-exempt Bond vs. Strategic Asset Management | Tax-exempt Bond vs. Strategic Asset Management | Tax-exempt Bond vs. Strategic Asset Management | Tax-exempt Bond vs. Strategic Asset Management |
| Federated Hermes vs. Deutsche Health And | Federated Hermes vs. Alphacentric Lifesci Healthcare | Federated Hermes vs. Baron Health Care | Federated Hermes vs. Allianzgi Health Sciences |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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