Correlation Between Federated Hermes and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Federated Kaufmann 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 Federated Hermes and Federated Kaufmann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes Mdt and Federated Kaufmann Small, you can compare the effects of market volatilities on Federated Hermes and Federated Kaufmann 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 Federated Hermes with a short position of Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Federated Kaufmann.
Diversification Opportunities for Federated Hermes and Federated Kaufmann
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Mdt and Federated Kaufmann Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Small and Federated Hermes 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 Federated Hermes Mdt are associated (or correlated) with Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann Small has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated Kaufmann go up and down completely randomly.
Pair Corralation between Federated Hermes and Federated Kaufmann
Assuming the 90 days horizon Federated Hermes Mdt is expected to generate 0.31 times more return on investment than Federated Kaufmann. However, Federated Hermes Mdt is 3.2 times less risky than Federated Kaufmann. It trades about 0.06 of its potential returns per unit of risk. Federated Kaufmann Small is currently generating about -0.01 per unit of risk. If you would invest 1,951 in Federated Hermes Mdt on October 24, 2024 and sell it today you would earn a total of 32.00 from holding Federated Hermes Mdt or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Mdt vs. Federated Kaufmann Small
Performance |
| Timeline |
| Federated Hermes Mdt |
| Federated Kaufmann Small |
Federated Hermes and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Federated Kaufmann
The main advantage of trading using opposite Federated Hermes and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Federated Kaufmann 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 Kaufmann will offset losses from the drop in Federated Kaufmann's long position.| Federated Hermes vs. Vy Columbia Small | Federated Hermes vs. Ab Small Cap | Federated Hermes vs. Small Pany Growth | Federated Hermes vs. Df Dent Small |
| Federated Kaufmann vs. Federated Hermes Mdt | Federated Kaufmann vs. Federated Mdt Large | Federated Kaufmann vs. Federated High Income | Federated Kaufmann 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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