Correlation Between Federated Hermes and Federated Global
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Federated Global 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 Global 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 Global Allocation, you can compare the effects of market volatilities on Federated Hermes and Federated Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Federated Global.
Diversification Opportunities for Federated Hermes and Federated Global
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and Federated is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Mdt and Federated Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Global All 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Global All has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated Global go up and down completely randomly.
Pair Corralation between Federated Hermes and Federated Global
Assuming the 90 days horizon Federated Hermes is expected to generate 1.25 times less return on investment than Federated Global. But when comparing it to its historical volatility, Federated Hermes Mdt is 1.36 times less risky than Federated Global. It trades about 0.1 of its potential returns per unit of risk. Federated Global Allocation is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,666 in Federated Global Allocation on September 13, 2024 and sell it today you would earn a total of 433.00 from holding Federated Global Allocation or generate 25.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Mdt vs. Federated Global Allocation
Performance |
| Timeline |
| Federated Hermes Mdt |
| Federated Global All |
Federated Hermes and Federated Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Federated Global
The main advantage of trading using opposite Federated Hermes and Federated Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Federated Global 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 Global will offset losses from the drop in Federated Global's long position.| Federated Hermes vs. Multisector Bond Sma | Federated Hermes vs. Blrc Sgy Mnp | Federated Hermes vs. Versatile Bond Portfolio | Federated Hermes vs. Alliancebernstein Bond |
| Federated Global vs. Federated Hermes Mdt | Federated Global vs. Federated Mdt Large | Federated Global vs. Federated High Income | Federated Global 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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