Correlation Between Ab Sustainable and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Ab Sustainable and Federated Strategic 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 Ab Sustainable and Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Sustainable Thematic and Federated Strategic Income, you can compare the effects of market volatilities on Ab Sustainable and Federated Strategic 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 Ab Sustainable with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Sustainable and Federated Strategic.
Diversification Opportunities for Ab Sustainable and Federated Strategic
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STHYX and Federated is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ab Sustainable Thematic and Federated Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic and Ab Sustainable 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 Ab Sustainable Thematic are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic has no effect on the direction of Ab Sustainable i.e., Ab Sustainable and Federated Strategic go up and down completely randomly.
Pair Corralation between Ab Sustainable and Federated Strategic
Assuming the 90 days horizon Ab Sustainable is expected to generate 1.15 times less return on investment than Federated Strategic. In addition to that, Ab Sustainable is 1.41 times more volatile than Federated Strategic Income. It trades about 0.1 of its total potential returns per unit of risk. Federated Strategic Income is currently generating about 0.16 per unit of volatility. 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 | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ab Sustainable Thematic vs. Federated Strategic Income
Performance |
| Timeline |
| Ab Sustainable Thematic |
| Federated Strategic |
Ab Sustainable and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Sustainable and Federated Strategic
The main advantage of trading using opposite Ab Sustainable and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Sustainable position performs unexpectedly, Federated Strategic 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 Strategic will offset losses from the drop in Federated Strategic's long position.| Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Minnesota Portfolio |
| Federated Strategic vs. Federated Emerging Market | Federated Strategic vs. Federated Mdt All | Federated Strategic vs. Federated Mdt Balanced | Federated Strategic 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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