Correlation Between Us Government and Federated Total
Can any of the company-specific risk be diversified away by investing in both Us Government and Federated Total 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 Us Government and Federated Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Federated Total Return, you can compare the effects of market volatilities on Us Government and Federated Total 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 Us Government with a short position of Federated Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Federated Total.
Diversification Opportunities for Us Government and Federated Total
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between UGSFX and Federated is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Federated Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Total Return and Us Government 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 Us Government Securities are associated (or correlated) with Federated Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Total Return has no effect on the direction of Us Government i.e., Us Government and Federated Total go up and down completely randomly.
Pair Corralation between Us Government and Federated Total
Assuming the 90 days horizon Us Government is expected to generate 2.46 times less return on investment than Federated Total. But when comparing it to its historical volatility, Us Government Securities is 1.01 times less risky than Federated Total. It trades about 0.04 of its potential returns per unit of risk. Federated Total Return is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 938.00 in Federated Total Return on August 30, 2024 and sell it today you would earn a total of 6.00 from holding Federated Total Return or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. Federated Total Return
Performance |
| Timeline |
| Us Government Securities |
| Federated Total Return |
Us Government and Federated Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Federated Total
The main advantage of trading using opposite Us Government and Federated Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government position performs unexpectedly, Federated Total 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 Total will offset losses from the drop in Federated Total's long position.| Us Government vs. Us Government Securities | Us Government vs. American Funds Government | Us Government vs. Vanguard Mortgage Backed Securities | Us Government vs. Vanguard Gnma Fund |
| Federated Total vs. Us Government Plus | Federated Total vs. Franklin Adjustable Government | Federated Total vs. Us Government Securities | Federated Total vs. Fidelity Series Government |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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