Correlation Between American Funds and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both American Funds and Federated Strategic 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 Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Emerging and Federated Strategic Income, you can compare the effects of market volatilities on American Funds and Federated Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Federated Strategic.
Diversification Opportunities for American Funds and Federated Strategic
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Federated is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Emerging and Federated Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic 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 Emerging are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic has no effect on the direction of American Funds i.e., American Funds and Federated Strategic go up and down completely randomly.
Pair Corralation between American Funds and Federated Strategic
Assuming the 90 days horizon American Funds Emerging is expected to under-perform the Federated Strategic. In addition to that, American Funds is 1.35 times more volatile than Federated Strategic Income. It trades about -0.06 of its total potential returns per unit of risk. Federated Strategic Income is currently generating about 0.14 per unit of volatility. If you would invest 822.00 in Federated Strategic Income on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Federated Strategic Income or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Emerging vs. Federated Strategic Income
Performance |
| Timeline |
| American Funds Emerging |
| Federated Strategic |
American Funds and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Federated Strategic
The main advantage of trading using opposite American Funds and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Federated Strategic 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 Strategic will offset losses from the drop in Federated Strategic's long position.| American Funds vs. Icon Equity Income | American Funds vs. Us Strategic Equity | American Funds vs. Ab Select Equity | American Funds vs. Us Vector Equity |
| Federated Strategic vs. Federated Emerging Market | Federated Strategic vs. Federated Mdt All | Federated Strategic vs. Federated Mdt Balanced | Federated Strategic 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stocks Directory Find actively traded stocks across global markets |