Correlation Between Us Government and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Federated Hermes Ultrashort, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Federated Hermes.
Diversification Opportunities for Us Government and Federated Hermes
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RGVJX and Federated is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Federated Hermes Ultrashort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Ult and Us Government 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 Us Government Securities 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 Ult has no effect on the direction of Us Government i.e., Us Government and Federated Hermes go up and down completely randomly.
Pair Corralation between Us Government and Federated Hermes
Assuming the 90 days horizon Us Government is expected to generate 3.27 times less return on investment than Federated Hermes. In addition to that, Us Government is 4.54 times more volatile than Federated Hermes Ultrashort. It trades about 0.02 of its total potential returns per unit of risk. Federated Hermes Ultrashort is currently generating about 0.24 per unit of volatility. If you would invest 829.00 in Federated Hermes Ultrashort on September 5, 2024 and sell it today you would earn a total of 99.00 from holding Federated Hermes Ultrashort or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. Federated Hermes Ultrashort
Performance |
| Timeline |
| Us Government Securities |
| Federated Hermes Ult |
Us Government and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Federated Hermes
The main advantage of trading using opposite Us Government and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. Prudential Financial Services | Us Government vs. Gabelli Global Financial | Us Government vs. Angel Oak Financial | Us Government vs. Fidelity Advisor Financial |
| Federated Hermes vs. Guidepath Managed Futures | Federated Hermes vs. Aqr Managed Futures | Federated Hermes vs. Western Asset Inflation | Federated Hermes vs. Asg Managed Futures |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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