Correlation Between Relative Value and Federated Short-term
Can any of the company-specific risk be diversified away by investing in both Relative Value and Federated Short-term 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-term 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-term 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-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Relative Value and Federated Short-term.
Diversification Opportunities for Relative Value and Federated Short-term
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Relative and Federated is 0.05. 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-term. 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-term go up and down completely randomly.
Pair Corralation between Relative Value and Federated Short-term
Assuming the 90 days horizon The Relative Value is expected to under-perform the Federated Short-term. In addition to that, Relative Value is 5.32 times more volatile than Federated Short Term Income. It trades about -0.16 of its total potential returns per unit of risk. Federated Short Term Income is currently generating about -0.32 per unit of volatility. If you would invest 852.00 in Federated Short Term Income on October 7, 2024 and sell it today you would lose (4.00) from holding Federated Short Term Income or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Relative Value vs. Federated Short Term Income
Performance |
| Timeline |
| Relative Value |
| Federated Short Term |
Relative Value and Federated Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Relative Value and Federated Short-term
The main advantage of trading using opposite Relative Value and Federated Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Relative Value position performs unexpectedly, Federated Short-term 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-term will offset losses from the drop in Federated Short-term's long position.| Relative Value vs. Health Care Ultrasector | Relative Value vs. Tekla Healthcare Investors | Relative Value vs. Highland Longshort Healthcare | Relative Value vs. Eventide Healthcare Life |
| Federated Short-term vs. Clearbridge Energy Mlp | Federated Short-term vs. Fidelity Advisor Energy | Federated Short-term vs. Clearbridge Energy Mlp | Federated Short-term vs. Blackrock All Cap Energy |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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