Correlation Between Sarofim Equity and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Sarofim Equity 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 Sarofim Equity and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarofim Equity and Federated Hermes Emerging, you can compare the effects of market volatilities on Sarofim Equity 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 Sarofim Equity with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarofim Equity and Federated Hermes.
Diversification Opportunities for Sarofim Equity and Federated Hermes
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sarofim and Federated is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sarofim Equity and Federated Hermes Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Emerging and Sarofim Equity 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 Sarofim Equity 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 Emerging has no effect on the direction of Sarofim Equity i.e., Sarofim Equity and Federated Hermes go up and down completely randomly.
Pair Corralation between Sarofim Equity and Federated Hermes
Assuming the 90 days horizon Sarofim Equity is expected to generate 0.62 times more return on investment than Federated Hermes. However, Sarofim Equity is 1.62 times less risky than Federated Hermes. It trades about 0.05 of its potential returns per unit of risk. Federated Hermes Emerging is currently generating about -0.09 per unit of risk. If you would invest 1,718 in Sarofim Equity on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Sarofim Equity or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sarofim Equity vs. Federated Hermes Emerging
Performance |
| Timeline |
| Sarofim Equity |
| Federated Hermes Emerging |
Sarofim Equity and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarofim Equity and Federated Hermes
The main advantage of trading using opposite Sarofim Equity and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarofim Equity 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.| Sarofim Equity vs. Vanguard Total Stock | Sarofim Equity vs. Vanguard 500 Index | Sarofim Equity vs. Vanguard Total Stock | Sarofim Equity vs. Vanguard Total Stock |
| Federated Hermes vs. Pace High Yield | Federated Hermes vs. Franklin High Yield | Federated Hermes vs. Versatile Bond Portfolio | Federated Hermes vs. Artisan High Income |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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