Correlation Between Vanguard Short-term and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both Vanguard Short-term and Federated Kaufmann 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 Vanguard Short-term and Federated Kaufmann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Short Term Federal and Federated Kaufmann Fund, you can compare the effects of market volatilities on Vanguard Short-term and Federated Kaufmann 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 Vanguard Short-term with a short position of Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Short-term and Federated Kaufmann.
Diversification Opportunities for Vanguard Short-term and Federated Kaufmann
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Federated is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Federal and Federated Kaufmann Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann and Vanguard Short-term 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 Vanguard Short Term Federal are associated (or correlated) with Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann has no effect on the direction of Vanguard Short-term i.e., Vanguard Short-term and Federated Kaufmann go up and down completely randomly.
Pair Corralation between Vanguard Short-term and Federated Kaufmann
Assuming the 90 days horizon Vanguard Short-term is expected to generate 5.44 times less return on investment than Federated Kaufmann. But when comparing it to its historical volatility, Vanguard Short Term Federal is 6.9 times less risky than Federated Kaufmann. It trades about 0.16 of its potential returns per unit of risk. Federated Kaufmann Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 560.00 in Federated Kaufmann Fund on September 1, 2024 and sell it today you would earn a total of 96.00 from holding Federated Kaufmann Fund or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Vanguard Short Term Federal vs. Federated Kaufmann Fund
Performance |
| Timeline |
| Vanguard Short Term |
| Federated Kaufmann |
Vanguard Short-term and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Short-term and Federated Kaufmann
The main advantage of trading using opposite Vanguard Short-term and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Short-term position performs unexpectedly, Federated Kaufmann 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 Kaufmann will offset losses from the drop in Federated Kaufmann's long position.The idea behind Vanguard Short Term Federal and Federated Kaufmann Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Federated Kaufmann vs. Federated Emerging Market | Federated Kaufmann vs. Federated Mdt All | Federated Kaufmann vs. Federated Mdt Balanced | Federated Kaufmann vs. Federated Global Allocation |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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