Correlation Between Armada Hflr and Federated Ultrashort

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Federated Ultrashort 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 Armada Hflr and Federated Ultrashort into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and Federated Ultrashort Bond, you can compare the effects of market volatilities on Armada Hflr and Federated Ultrashort 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 Armada Hflr with a short position of Federated Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Federated Ultrashort.

Diversification Opportunities for Armada Hflr and Federated Ultrashort

-0.45

Correlation Coefficient

Armada Hflr  Federated Ultrashort

Very good diversification

The 3 months correlation between Armada and Federated is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Federated Ultrashort Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ultrashort Bond and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Federated Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ultrashort Bond has no effect on the direction of Armada Hflr i.e., Armada Hflr and Federated Ultrashort go up and down completely randomly.

Pair Corralation between Armada Hflr and Federated Ultrashort

Considering the 90-day investment horizon Armada Hflr is expected to generate 1.56 times less return on investment than Federated Ultrashort. In addition to that, Armada Hflr is 16.31 times more volatile than Federated Ultrashort Bond. It trades about 0.01 of its total potential returns per unit of risk. Federated Ultrashort Bond is currently generating about 0.23 per unit of volatility. If you would invest  831.00  in Federated Ultrashort Bond on September 21, 2024 and sell it today you would earn a total of  97.00  from holding Federated Ultrashort Bond or generate 11.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Armada Hflr Pr  vs.  Federated Ultrashort Bond

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Federated Ultrashort Bond

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Ultrashort Bond are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Ultrashort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and Federated Ultrashort

The main advantage of trading using opposite Armada Hflr and Federated Ultrashort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, Federated Ultrashort 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 Ultrashort will offset losses from the drop in Federated Ultrashort's long position.

The idea behind Armada Hflr Pr and Federated Ultrashort Bond 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.