Correlation Between Federated Strategic and Vanguard Value
Can any of the company-specific risk be diversified away by investing in both Federated Strategic and Vanguard Value 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 Vanguard Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Strategic Value and Vanguard Value Index, you can compare the effects of market volatilities on Federated Strategic and Vanguard Value 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 Vanguard Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Vanguard Value.
Diversification Opportunities for Federated Strategic and Vanguard Value
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Vanguard is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Value and Vanguard Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Index 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 Value are associated (or correlated) with Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Index has no effect on the direction of Federated Strategic i.e., Federated Strategic and Vanguard Value go up and down completely randomly.
Pair Corralation between Federated Strategic and Vanguard Value
Assuming the 90 days horizon Federated Strategic Value is expected to under-perform the Vanguard Value. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Strategic Value is 1.03 times less risky than Vanguard Value. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Vanguard Value Index is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 6,918 in Vanguard Value Index on September 13, 2024 and sell it today you would lose (53.00) from holding Vanguard Value Index or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Strategic Value vs. Vanguard Value Index
Performance |
| Timeline |
| Federated Strategic Value |
| Vanguard Value Index |
Federated Strategic and Vanguard Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Strategic and Vanguard Value
The main advantage of trading using opposite Federated Strategic and Vanguard Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic position performs unexpectedly, Vanguard Value 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 Vanguard Value will offset losses from the drop in Vanguard Value'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 |
| Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |