Correlation Between Federated Strategic and Federated Global
Can any of the company-specific risk be diversified away by investing in both Federated Strategic 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 Federated Strategic and Federated Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Strategic Income and Federated Global Total, you can compare the effects of market volatilities on Federated Strategic 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 Federated Strategic with a short position of Federated Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Federated Global.
Diversification Opportunities for Federated Strategic and Federated Global
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Income and Federated Global Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Global Total and Federated Strategic 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 Strategic Income 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 Total has no effect on the direction of Federated Strategic i.e., Federated Strategic and Federated Global go up and down completely randomly.
Pair Corralation between Federated Strategic and Federated Global
Assuming the 90 days horizon Federated Strategic Income is expected to generate 0.67 times more return on investment than Federated Global. However, Federated Strategic Income is 1.49 times less risky than Federated Global. It trades about 0.16 of its potential returns per unit of risk. Federated Global Total is currently generating about 0.07 per unit of risk. If you would invest 789.00 in Federated Strategic Income on September 1, 2024 and sell it today you would earn a total of 40.00 from holding Federated Strategic Income or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Strategic Income vs. Federated Global Total
Performance |
| Timeline |
| Federated Strategic |
| Federated Global Total |
Federated Strategic and Federated Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Strategic and Federated Global
The main advantage of trading using opposite Federated Strategic and Federated Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic 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.| Federated Strategic vs. Federated Emerging Market | Federated Strategic vs. Federated Mdt All | Federated Strategic vs. Federated Mdt Balanced | Federated Strategic vs. Federated Global Allocation |
| Federated Global vs. Federated Emerging Market | Federated Global vs. Federated Mdt All | Federated Global vs. Federated Mdt Balanced | Federated Global vs. Federated Global Allocation |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |