Correlation Between Royce Opportunity and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Royce Opportunity 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 Royce Opportunity and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royce Opportunity Fund and Federated Hermes Inflation, you can compare the effects of market volatilities on Royce Opportunity 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 Royce Opportunity with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Opportunity and Federated Hermes.
Diversification Opportunities for Royce Opportunity and Federated Hermes
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Royce and Federated is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Royce Opportunity Fund and Federated Hermes Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Inf and Royce Opportunity 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 Royce Opportunity Fund 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 Inf has no effect on the direction of Royce Opportunity i.e., Royce Opportunity and Federated Hermes go up and down completely randomly.
Pair Corralation between Royce Opportunity and Federated Hermes
Assuming the 90 days horizon Royce Opportunity Fund is expected to under-perform the Federated Hermes. In addition to that, Royce Opportunity is 9.81 times more volatile than Federated Hermes Inflation. It trades about -0.09 of its total potential returns per unit of risk. Federated Hermes Inflation is currently generating about 0.13 per unit of volatility. If you would invest 982.00 in Federated Hermes Inflation on September 13, 2024 and sell it today you would earn a total of 6.00 from holding Federated Hermes Inflation or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royce Opportunity Fund vs. Federated Hermes Inflation
Performance |
| Timeline |
| Royce Opportunity |
| Federated Hermes Inf |
Royce Opportunity and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royce Opportunity and Federated Hermes
The main advantage of trading using opposite Royce Opportunity and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Opportunity 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.| Royce Opportunity vs. Payden High Income | Royce Opportunity vs. Neuberger Berman Income | Royce Opportunity vs. T Rowe Price | Royce Opportunity vs. Buffalo High Yield |
| Federated Hermes vs. Commodities Strategy Fund | Federated Hermes vs. Eic Value Fund | Federated Hermes vs. T Rowe Price | Federated Hermes vs. Rbb 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 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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