Correlation Between Federated Strategic and Federated Government
Can any of the company-specific risk be diversified away by investing in both Federated Strategic and Federated Government 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 Government 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 Government Income, you can compare the effects of market volatilities on Federated Strategic and Federated Government 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 Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Federated Government.
Diversification Opportunities for Federated Strategic and Federated Government
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Federated is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Income and Federated Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government 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 Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Federated Strategic i.e., Federated Strategic and Federated Government go up and down completely randomly.
Pair Corralation between Federated Strategic and Federated Government
Assuming the 90 days horizon Federated Strategic is expected to generate 1.34 times less return on investment than Federated Government. But when comparing it to its historical volatility, Federated Strategic Income is 1.17 times less risky than Federated Government. It trades about 0.19 of its potential returns per unit of risk. Federated Government Income is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 881.00 in Federated Government Income on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Federated Government Income or generate 1.14% 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 Government Income
Performance |
| Timeline |
| Federated Strategic |
| Federated Government |
Federated Strategic and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Strategic and Federated Government
The main advantage of trading using opposite Federated Strategic and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic position performs unexpectedly, Federated Government 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 Government will offset losses from the drop in Federated Government's long position.| Federated Strategic vs. Iaadx | Federated Strategic vs. Ab Value Fund | Federated Strategic vs. Fa 529 Aggressive | Federated Strategic vs. Scharf Global Opportunity |
| Federated Government vs. Ab Discovery Value | Federated Government vs. Pace Smallmedium Value | Federated Government vs. Victory Rs Partners | Federated Government vs. Queens Road Small |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |