Correlation Between Tax Managed and Federated Equity
Can any of the company-specific risk be diversified away by investing in both Tax Managed and Federated Equity 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 Tax Managed and Federated Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tax Managed Large Cap and Federated Equity Income, you can compare the effects of market volatilities on Tax Managed and Federated Equity 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 Tax Managed with a short position of Federated Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax Managed and Federated Equity.
Diversification Opportunities for Tax Managed and Federated Equity
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tax and Federated is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Large Cap and Federated Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Equity Income and Tax Managed 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 Tax Managed Large Cap are associated (or correlated) with Federated Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Equity Income has no effect on the direction of Tax Managed i.e., Tax Managed and Federated Equity go up and down completely randomly.
Pair Corralation between Tax Managed and Federated Equity
Assuming the 90 days horizon Tax Managed Large Cap is expected to generate 1.01 times more return on investment than Federated Equity. However, Tax Managed is 1.01 times more volatile than Federated Equity Income. It trades about 0.11 of its potential returns per unit of risk. Federated Equity Income is currently generating about 0.05 per unit of risk. If you would invest 5,890 in Tax Managed Large Cap on September 3, 2024 and sell it today you would earn a total of 2,909 from holding Tax Managed Large Cap or generate 49.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tax Managed Large Cap vs. Federated Equity Income
Performance |
| Timeline |
| Tax Managed Large |
| Federated Equity Income |
Tax Managed and Federated Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tax Managed and Federated Equity
The main advantage of trading using opposite Tax Managed and Federated Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax Managed position performs unexpectedly, Federated Equity 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 Equity will offset losses from the drop in Federated Equity's long position.| Tax Managed vs. Ultramid Cap Profund Ultramid Cap | Tax Managed vs. Pace Smallmedium Value | Tax Managed vs. Amg River Road | Tax Managed vs. Royce Opportunity Fund |
| Federated Equity vs. Financials Ultrasector Profund | Federated Equity vs. Gabelli Global Financial | Federated Equity vs. 1919 Financial Services | Federated Equity vs. Icon Financial Fund |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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