Correlation Between Pear Tree and Federated Short
Can any of the company-specific risk be diversified away by investing in both Pear Tree and Federated Short 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 Pear Tree and Federated Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pear Tree Polaris and Federated Short Term Income, you can compare the effects of market volatilities on Pear Tree and Federated Short 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 Pear Tree with a short position of Federated Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pear Tree and Federated Short.
Diversification Opportunities for Pear Tree and Federated Short
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pear and Federated is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Polaris and Federated Short Term Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Term and Pear Tree 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 Pear Tree Polaris are associated (or correlated) with Federated Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short Term has no effect on the direction of Pear Tree i.e., Pear Tree and Federated Short go up and down completely randomly.
Pair Corralation between Pear Tree and Federated Short
Assuming the 90 days horizon Pear Tree is expected to generate 6.4 times less return on investment than Federated Short. In addition to that, Pear Tree is 5.2 times more volatile than Federated Short Term Income. It trades about 0.01 of its total potential returns per unit of risk. Federated Short Term Income is currently generating about 0.18 per unit of volatility. If you would invest 778.00 in Federated Short Term Income on September 12, 2024 and sell it today you would earn a total of 73.00 from holding Federated Short Term Income or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pear Tree Polaris vs. Federated Short Term Income
Performance |
| Timeline |
| Pear Tree Polaris |
| Federated Short Term |
Pear Tree and Federated Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pear Tree and Federated Short
The main advantage of trading using opposite Pear Tree and Federated Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pear Tree position performs unexpectedly, Federated Short 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 Short will offset losses from the drop in Federated Short's long position.| Pear Tree vs. Old Westbury Short Term | Pear Tree vs. Virtus Multi Sector Short | Pear Tree vs. Alpine Ultra Short | Pear Tree vs. Barings Active Short |
| Federated Short vs. Federated Hermes Mdt | Federated Short vs. Federated Mdt Large | Federated Short vs. Federated High Income | Federated Short 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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