Correlation Between Federated Mdt and Federated Bond
Can any of the company-specific risk be diversified away by investing in both Federated Mdt and Federated Bond 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 Mdt and Federated Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Mdt Balanced and Federated Bond Fund, you can compare the effects of market volatilities on Federated Mdt and Federated Bond 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 Mdt with a short position of Federated Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mdt and Federated Bond.
Diversification Opportunities for Federated Mdt and Federated Bond
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Federated is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt Balanced and Federated Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Bond and Federated Mdt 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 Mdt Balanced are associated (or correlated) with Federated Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Bond has no effect on the direction of Federated Mdt i.e., Federated Mdt and Federated Bond go up and down completely randomly.
Pair Corralation between Federated Mdt and Federated Bond
Assuming the 90 days horizon Federated Mdt is expected to generate 1.76 times less return on investment than Federated Bond. In addition to that, Federated Mdt is 2.87 times more volatile than Federated Bond Fund. It trades about 0.02 of its total potential returns per unit of risk. Federated Bond Fund is currently generating about 0.08 per unit of volatility. If you would invest 799.00 in Federated Bond Fund on November 28, 2024 and sell it today you would earn a total of 35.00 from holding Federated Bond Fund or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Mdt Balanced vs. Federated Bond Fund
Performance |
| Timeline |
| Federated Mdt Balanced |
| Federated Bond |
Federated Mdt and Federated Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Mdt and Federated Bond
The main advantage of trading using opposite Federated Mdt and Federated Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Mdt position performs unexpectedly, Federated Bond 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 Bond will offset losses from the drop in Federated Bond's long position.| Federated Mdt vs. Stone Ridge Diversified | Federated Mdt vs. Jhancock Diversified Macro | Federated Mdt vs. Harbor Diversified International | Federated Mdt vs. Jpmorgan Diversified Fund |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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