Correlation Between Federated Strategic and Ab Sustainable
Can any of the company-specific risk be diversified away by investing in both Federated Strategic and Ab Sustainable 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 Ab Sustainable 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 Ab Sustainable Thematic, you can compare the effects of market volatilities on Federated Strategic and Ab Sustainable 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 Ab Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Ab Sustainable.
Diversification Opportunities for Federated Strategic and Ab Sustainable
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and STHYX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Income and Ab Sustainable Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Sustainable Thematic 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 Ab Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Sustainable Thematic has no effect on the direction of Federated Strategic i.e., Federated Strategic and Ab Sustainable go up and down completely randomly.
Pair Corralation between Federated Strategic and Ab Sustainable
Assuming the 90 days horizon Federated Strategic Income is expected to generate 0.71 times more return on investment than Ab Sustainable. However, Federated Strategic Income is 1.41 times less risky than Ab Sustainable. It trades about 0.16 of its potential returns per unit of risk. Ab Sustainable Thematic is currently generating about 0.1 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 | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Federated Strategic Income vs. Ab Sustainable Thematic
Performance |
| Timeline |
| Federated Strategic |
| Ab Sustainable Thematic |
Federated Strategic and Ab Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Strategic and Ab Sustainable
The main advantage of trading using opposite Federated Strategic and Ab Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic position performs unexpectedly, Ab Sustainable 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 Ab Sustainable will offset losses from the drop in Ab Sustainable'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 |
| Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Minnesota Portfolio |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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