Correlation Between American Funds and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both American Funds and Federated Mdt 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 American Funds and Federated Mdt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2055 and Federated Mdt Large, you can compare the effects of market volatilities on American Funds and Federated Mdt 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 American Funds with a short position of Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Federated Mdt.
Diversification Opportunities for American Funds and Federated Mdt
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and FEDERATED is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2055 and Federated Mdt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Large and American Funds 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 American Funds 2055 are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Large has no effect on the direction of American Funds i.e., American Funds and Federated Mdt go up and down completely randomly.
Pair Corralation between American Funds and Federated Mdt
Assuming the 90 days horizon American Funds is expected to generate 1.09 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, American Funds 2055 is 1.12 times less risky than Federated Mdt. It trades about 0.1 of its potential returns per unit of risk. Federated Mdt Large is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,555 in Federated Mdt Large on September 5, 2024 and sell it today you would earn a total of 1,168 from holding Federated Mdt Large or generate 45.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2055 vs. Federated Mdt Large
Performance |
| Timeline |
| American Funds 2055 |
| Federated Mdt Large |
American Funds and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Federated Mdt
The main advantage of trading using opposite American Funds and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Federated Mdt 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 Mdt will offset losses from the drop in Federated Mdt's long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| Federated Mdt vs. Federated Max Cap Index | Federated Mdt vs. Federated Mdt Mid Cap | Federated Mdt vs. Federated Max Cap Index | Federated Mdt vs. Federated Global Allocation |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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