Correlation Between Federated Clover and Government Securities
Can any of the company-specific risk be diversified away by investing in both Federated Clover and Government Securities 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 Clover and Government Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Clover Small and Government Securities Fund, you can compare the effects of market volatilities on Federated Clover and Government Securities 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 Clover with a short position of Government Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Clover and Government Securities.
Diversification Opportunities for Federated Clover and Government Securities
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and Government is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Federated Clover Small and Government Securities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Securities and Federated Clover 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 Clover Small are associated (or correlated) with Government Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Securities has no effect on the direction of Federated Clover i.e., Federated Clover and Government Securities go up and down completely randomly.
Pair Corralation between Federated Clover and Government Securities
Assuming the 90 days horizon Federated Clover Small is expected to generate 4.51 times more return on investment than Government Securities. However, Federated Clover is 4.51 times more volatile than Government Securities Fund. It trades about 0.1 of its potential returns per unit of risk. Government Securities Fund is currently generating about 0.1 per unit of risk. If you would invest 2,208 in Federated Clover Small on September 1, 2024 and sell it today you would earn a total of 376.00 from holding Federated Clover Small or generate 17.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Federated Clover Small vs. Government Securities Fund
Performance |
| Timeline |
| Federated Clover Small |
| Government Securities |
Federated Clover and Government Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Clover and Government Securities
The main advantage of trading using opposite Federated Clover and Government Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Clover position performs unexpectedly, Government Securities 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 Government Securities will offset losses from the drop in Government Securities' long position.| Federated Clover vs. Federated Emerging Market | Federated Clover vs. Federated Mdt All | Federated Clover vs. Federated Mdt Balanced | Federated Clover vs. Federated Global Allocation |
| Government Securities vs. Capital Growth Fund | Government Securities vs. High Income Fund | Government Securities vs. International Fund International | Government Securities vs. Growth Income Fund |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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