Correlation Between Ab Small and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Ab Small 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 Ab Small and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Federated Hermes Emerging, you can compare the effects of market volatilities on Ab Small 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 Ab Small with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Federated Hermes.
Diversification Opportunities for Ab Small and Federated Hermes
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between QUAIX and Federated is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Federated Hermes Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Emerging and Ab Small 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 Ab Small Cap 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 Emerging has no effect on the direction of Ab Small i.e., Ab Small and Federated Hermes go up and down completely randomly.
Pair Corralation between Ab Small and Federated Hermes
Assuming the 90 days horizon Ab Small Cap is expected to generate 1.45 times more return on investment than Federated Hermes. However, Ab Small is 1.45 times more volatile than Federated Hermes Emerging. It trades about 0.08 of its potential returns per unit of risk. Federated Hermes Emerging is currently generating about -0.09 per unit of risk. If you would invest 7,439 in Ab Small Cap on September 13, 2024 and sell it today you would earn a total of 310.00 from holding Ab Small Cap or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Federated Hermes Emerging
Performance |
| Timeline |
| Ab Small Cap |
| Federated Hermes Emerging |
Ab Small and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Federated Hermes
The main advantage of trading using opposite Ab Small and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small 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.| Ab Small vs. Health Biotchnology Portfolio | Ab Small vs. Prudential Health Sciences | Ab Small vs. Delaware Healthcare Fund | Ab Small vs. Baillie Gifford Health |
| Federated Hermes vs. Aqr Small Cap | Federated Hermes vs. Touchstone Small Cap | Federated Hermes vs. Ab Small Cap | Federated Hermes vs. Glg Intl Small |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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