Correlation Between Federated Clover and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both Federated Clover and Federated Emerging 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 Federated Emerging 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 Federated Emerging Market, you can compare the effects of market volatilities on Federated Clover and Federated Emerging 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 Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Clover and Federated Emerging.
Diversification Opportunities for Federated Clover and Federated Emerging
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federated and Federated is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Federated Clover Small and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market 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 Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of Federated Clover i.e., Federated Clover and Federated Emerging go up and down completely randomly.
Pair Corralation between Federated Clover and Federated Emerging
Assuming the 90 days horizon Federated Clover Small is expected to generate 5.43 times more return on investment than Federated Emerging. However, Federated Clover is 5.43 times more volatile than Federated Emerging Market. It trades about 0.04 of its potential returns per unit of risk. Federated Emerging Market is currently generating about 0.18 per unit of risk. If you would invest 2,443 in Federated Clover Small on September 14, 2024 and sell it today you would earn a total of 146.00 from holding Federated Clover Small or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Clover Small vs. Federated Emerging Market
Performance |
| Timeline |
| Federated Clover Small |
| Federated Emerging Market |
Federated Clover and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Clover and Federated Emerging
The main advantage of trading using opposite Federated Clover and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Clover position performs unexpectedly, Federated Emerging 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 Emerging will offset losses from the drop in Federated Emerging's 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 |
| Federated Emerging vs. Federated Mdt All | Federated Emerging vs. Federated Mdt Balanced | Federated Emerging vs. Federated Global Allocation | Federated Emerging vs. Federated Hermes Emerging |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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