Correlation Between Federated Strategic and Federated Intermediate
Can any of the company-specific risk be diversified away by investing in both Federated Strategic and Federated Intermediate 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 Intermediate 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 Intermediate Municipal, you can compare the effects of market volatilities on Federated Strategic and Federated Intermediate 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 Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Federated Intermediate.
Diversification Opportunities for Federated Strategic and Federated Intermediate
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Federated is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Income and Federated Intermediate Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Intermediate 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 Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Intermediate has no effect on the direction of Federated Strategic i.e., Federated Strategic and Federated Intermediate go up and down completely randomly.
Pair Corralation between Federated Strategic and Federated Intermediate
Assuming the 90 days horizon Federated Strategic Income is expected to generate 1.82 times more return on investment than Federated Intermediate. However, Federated Strategic is 1.82 times more volatile than Federated Intermediate Municipal. It trades about 0.09 of its potential returns per unit of risk. Federated Intermediate Municipal is currently generating about 0.09 per unit of risk. If you would invest 722.00 in Federated Strategic Income on September 13, 2024 and sell it today you would earn a total of 115.00 from holding Federated Strategic Income or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Strategic Income vs. Federated Intermediate Municip
Performance |
| Timeline |
| Federated Strategic |
| Federated Intermediate |
Federated Strategic and Federated Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Strategic and Federated Intermediate
The main advantage of trading using opposite Federated Strategic and Federated Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic position performs unexpectedly, Federated Intermediate 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 Intermediate will offset losses from the drop in Federated Intermediate's long position.| Federated Strategic vs. Oil Gas Ultrasector | Federated Strategic vs. Calvert Global Energy | Federated Strategic vs. Firsthand Alternative Energy | Federated Strategic vs. World Energy Fund |
| Federated Intermediate vs. Federated Emerging Market | Federated Intermediate vs. Federated Mdt All | Federated Intermediate vs. Federated Mdt Balanced | Federated Intermediate 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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