Correlation Between Simt Large and Federated Global
Can any of the company-specific risk be diversified away by investing in both Simt Large and Federated Global 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 Simt Large and Federated Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simt Large Cap and Federated Global Allocation, you can compare the effects of market volatilities on Simt Large and Federated Global 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 Simt Large with a short position of Federated Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Large and Federated Global.
Diversification Opportunities for Simt Large and Federated Global
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simt and Federated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Simt Large Cap and Federated Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Global All and Simt Large 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 Simt Large Cap are associated (or correlated) with Federated Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Global All has no effect on the direction of Simt Large i.e., Simt Large and Federated Global go up and down completely randomly.
Pair Corralation between Simt Large and Federated Global
Assuming the 90 days horizon Simt Large Cap is expected to generate 1.96 times more return on investment than Federated Global. However, Simt Large is 1.96 times more volatile than Federated Global Allocation. It trades about 0.12 of its potential returns per unit of risk. Federated Global Allocation is currently generating about 0.11 per unit of risk. If you would invest 4,517 in Simt Large Cap on September 1, 2024 and sell it today you would earn a total of 771.00 from holding Simt Large Cap or generate 17.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Simt Large Cap vs. Federated Global Allocation
Performance |
| Timeline |
| Simt Large Cap |
| Federated Global All |
Simt Large and Federated Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Large and Federated Global
The main advantage of trading using opposite Simt Large and Federated Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Large position performs unexpectedly, Federated Global 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 Global will offset losses from the drop in Federated Global's long position.| Simt Large vs. Federated Institutional High | Simt Large vs. Metropolitan West High | Simt Large vs. Fidelity Capital Income | Simt Large vs. Western Asset High |
| Federated Global vs. Federated Kaufmann Large | Federated Global vs. Federated Mdt Large | Federated Global vs. Federated Mid Cap Index | Federated Global vs. Federated Max Cap Index |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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