Correlation Between Federated Strategic and Federated International
Can any of the company-specific risk be diversified away by investing in both Federated Strategic and Federated International 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 International 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 Federated International Leaders, you can compare the effects of market volatilities on Federated Strategic and Federated International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Federated International.
Diversification Opportunities for Federated Strategic and Federated International
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and FEDERATED is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Value and Federated International Leader in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated International 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 Federated International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated International has no effect on the direction of Federated Strategic i.e., Federated Strategic and Federated International go up and down completely randomly.
Pair Corralation between Federated Strategic and Federated International
Assuming the 90 days horizon Federated Strategic Value is expected to generate 0.58 times more return on investment than Federated International. However, Federated Strategic Value is 1.73 times less risky than Federated International. It trades about 0.25 of its potential returns per unit of risk. Federated International Leaders is currently generating about -0.19 per unit of risk. If you would invest 623.00 in Federated Strategic Value on August 30, 2024 and sell it today you would earn a total of 17.00 from holding Federated Strategic Value or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Federated Strategic Value vs. Federated International Leader
Performance |
| Timeline |
| Federated Strategic Value |
| Federated International |
Federated Strategic and Federated International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Strategic and Federated International
The main advantage of trading using opposite Federated Strategic and Federated International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic position performs unexpectedly, Federated International 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 International will offset losses from the drop in Federated International's long position.| Federated Strategic vs. Ivy Natural Resources | Federated Strategic vs. Calvert Global Energy | Federated Strategic vs. Franklin Natural Resources | Federated Strategic vs. Fidelity Advisor Energy |
| Federated International vs. Scharf Global Opportunity | Federated International vs. T Rowe Price | Federated International vs. Iaadx | Federated International vs. Arrow Managed Futures |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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