Correlation Between World Energy and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both World Energy and Federated Strategic 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 World Energy and Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Federated Strategic Value, you can compare the effects of market volatilities on World Energy and Federated Strategic 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 World Energy with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Federated Strategic.
Diversification Opportunities for World Energy and Federated Strategic
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between World and Federated is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Federated Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic Value and World Energy 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 World Energy Fund are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic Value has no effect on the direction of World Energy i.e., World Energy and Federated Strategic go up and down completely randomly.
Pair Corralation between World Energy and Federated Strategic
Assuming the 90 days horizon World Energy Fund is expected to generate 1.68 times more return on investment than Federated Strategic. However, World Energy is 1.68 times more volatile than Federated Strategic Value. It trades about 0.04 of its potential returns per unit of risk. Federated Strategic Value is currently generating about 0.03 per unit of risk. If you would invest 1,189 in World Energy Fund on September 26, 2024 and sell it today you would earn a total of 261.00 from holding World Energy Fund or generate 21.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
World Energy Fund vs. Federated Strategic Value
Performance |
Timeline |
World Energy |
Federated Strategic Value |
World Energy and Federated Strategic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with World Energy and Federated Strategic
The main advantage of trading using opposite World Energy and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Federated Strategic 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 Strategic will offset losses from the drop in Federated Strategic's long position.World Energy vs. Bond Fund Investor | World Energy vs. Strategic Enhanced Yield | World Energy vs. Cavanal Hill Hedged | World Energy vs. Limited Duration Fund |
Federated Strategic vs. World Energy Fund | Federated Strategic vs. Oil Gas Ultrasector | Federated Strategic vs. Gmo Resources | Federated Strategic vs. Invesco Energy 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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