Correlation Between Deutsche Small and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Deutsche Small 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 Deutsche Small and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Small Cap and Federated Hermes Conservative, you can compare the effects of market volatilities on Deutsche Small 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 Deutsche Small with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Small and Federated Hermes.
Diversification Opportunities for Deutsche Small and Federated Hermes
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deutsche and Federated is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Small Cap and Federated Hermes Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Con and Deutsche Small 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 Deutsche Small Cap 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 Con has no effect on the direction of Deutsche Small i.e., Deutsche Small and Federated Hermes go up and down completely randomly.
Pair Corralation between Deutsche Small and Federated Hermes
Assuming the 90 days horizon Deutsche Small Cap is expected to generate 20.72 times more return on investment than Federated Hermes. However, Deutsche Small is 20.72 times more volatile than Federated Hermes Conservative. It trades about 0.24 of its potential returns per unit of risk. Federated Hermes Conservative is currently generating about 0.1 per unit of risk. If you would invest 2,375 in Deutsche Small Cap on November 3, 2024 and sell it today you would earn a total of 123.00 from holding Deutsche Small Cap or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Small Cap vs. Federated Hermes Conservative
Performance |
| Timeline |
| Deutsche Small Cap |
| Federated Hermes Con |
Deutsche Small and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Small and Federated Hermes
The main advantage of trading using opposite Deutsche Small and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Small 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.| Deutsche Small vs. Virtus Seix Government | Deutsche Small vs. Prudential Government Money | Deutsche Small vs. Great West Government Mortgage | Deutsche Small vs. Lord Abbett Government |
| Federated Hermes vs. Neuberger Berman Real | Federated Hermes vs. Columbia Real Estate | Federated Hermes vs. Dunham Real Estate | Federated Hermes vs. Fidelity Real Estate |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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