Correlation Between Federated Global and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Federated Global and Federated Mdt 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 Federated Global and Federated Mdt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Global Allocation and Federated Mdt Small, you can compare the effects of market volatilities on Federated Global and Federated Mdt 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 Federated Global with a short position of Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Federated Mdt.
Diversification Opportunities for Federated Global and Federated Mdt
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Federated Mdt Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Small and Federated Global 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 Federated Global Allocation are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Small has no effect on the direction of Federated Global i.e., Federated Global and Federated Mdt go up and down completely randomly.
Pair Corralation between Federated Global and Federated Mdt
Assuming the 90 days horizon Federated Global is expected to generate 9.0 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Federated Global Allocation is 3.13 times less risky than Federated Mdt. It trades about 0.08 of its potential returns per unit of risk. Federated Mdt Small is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,776 in Federated Mdt Small on August 29, 2024 and sell it today you would earn a total of 236.00 from holding Federated Mdt Small or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Federated Global Allocation vs. Federated Mdt Small
Performance |
| Timeline |
| Federated Global All |
| Federated Mdt Small |
Federated Global and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Federated Mdt
The main advantage of trading using opposite Federated Global and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global position performs unexpectedly, Federated Mdt 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 Mdt will offset losses from the drop in Federated Mdt's long position.| Federated Global vs. Capital Income Builder | Federated Global vs. Capital Income Builder | Federated Global vs. Capital Income Builder | Federated Global vs. HUMANA INC |
| Federated Mdt vs. Putnam Equity Income | Federated Mdt vs. Putnam Growth Opportunities | Federated Mdt vs. HUMANA INC | Federated Mdt vs. Aquagold International |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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