Correlation Between Relative Value and Federated Short
Can any of the company-specific risk be diversified away by investing in both Relative Value and Federated Short 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 Relative Value and Federated Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Relative Value and Federated Short Term Income, you can compare the effects of market volatilities on Relative Value and Federated Short 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 Relative Value with a short position of Federated Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Relative Value and Federated Short.
Diversification Opportunities for Relative Value and Federated Short
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Relative and Federated is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Relative Value and Federated Short Term Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Term and Relative Value 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 The Relative Value are associated (or correlated) with Federated Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short Term has no effect on the direction of Relative Value i.e., Relative Value and Federated Short go up and down completely randomly.
Pair Corralation between Relative Value and Federated Short
Assuming the 90 days horizon Relative Value is expected to generate 3.34 times less return on investment than Federated Short. In addition to that, Relative Value is 1.26 times more volatile than Federated Short Term Income. It trades about 0.08 of its total potential returns per unit of risk. Federated Short Term Income is currently generating about 0.35 per unit of volatility. If you would invest 844.00 in Federated Short Term Income on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Federated Short Term Income or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Relative Value vs. Federated Short Term Income
Performance |
| Timeline |
| Relative Value |
| Federated Short Term |
Relative Value and Federated Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Relative Value and Federated Short
The main advantage of trading using opposite Relative Value and Federated Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Relative Value position performs unexpectedly, Federated Short 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 Short will offset losses from the drop in Federated Short's long position.| Relative Value vs. Huber Capital Diversified | Relative Value vs. Pimco Diversified Income | Relative Value vs. Lord Abbett Diversified | Relative Value vs. Blackrock Sm Cap |
| Federated Short vs. Franklin Growth Opportunities | Federated Short vs. Tfa Alphagen Growth | Federated Short vs. Praxis Growth Index | Federated Short vs. Eip Growth And |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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