Correlation Between City National and Federated Government
Can any of the company-specific risk be diversified away by investing in both City National and Federated Government 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 City National and Federated Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City National Rochdale and Federated Government Ultrashort, you can compare the effects of market volatilities on City National and Federated Government 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 City National with a short position of Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of City National and Federated Government.
Diversification Opportunities for City National and Federated Government
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between City and Federated is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding City National Rochdale and Federated Government Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government and City National 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 City National Rochdale are associated (or correlated) with Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of City National i.e., City National and Federated Government go up and down completely randomly.
Pair Corralation between City National and Federated Government
Assuming the 90 days horizon City National Rochdale is expected to generate 0.92 times more return on investment than Federated Government. However, City National Rochdale is 1.09 times less risky than Federated Government. It trades about 0.26 of its potential returns per unit of risk. Federated Government Ultrashort is currently generating about 0.23 per unit of risk. If you would invest 1,823 in City National Rochdale on November 9, 2024 and sell it today you would earn a total of 142.00 from holding City National Rochdale or generate 7.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City National Rochdale vs. Federated Government Ultrashor
Performance |
| Timeline |
| City National Rochdale |
| Federated Government |
City National and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City National and Federated Government
The main advantage of trading using opposite City National and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City National position performs unexpectedly, Federated Government 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 Government will offset losses from the drop in Federated Government's long position.| City National vs. Us Large Pany | City National vs. Washington Mutual Investors | City National vs. Hartford Moderate Allocation | City National vs. Knights Of Umbus |
| Federated Government vs. Columbia Vertible Securities | Federated Government vs. The Gamco Global | Federated Government vs. Mainstay Vertible Fund | Federated Government vs. Lord Abbett Vertible |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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