Correlation Between Community Reinvestment and Federated High

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

By analyzing existing cross correlation between Community Reinvestment Act and Federated High Yield, you can compare the effects of market volatilities on Community Reinvestment and Federated High 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 Community Reinvestment with a short position of Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Reinvestment and Federated High.

Diversification Opportunities for Community Reinvestment and Federated High

0.3

Correlation Coefficient

Community Reinvestment  Federated High

Weak diversification

The 3 months correlation between Community and Federated is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Community Reinvestment Act and Federated High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Yield and Community Reinvestment 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 Community Reinvestment Act are associated (or correlated) with Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Yield has no effect on the direction of Community Reinvestment i.e., Community Reinvestment and Federated High go up and down completely randomly.

Pair Corralation between Community Reinvestment and Federated High

Assuming the 90 days horizon Community Reinvestment Act is expected to under-perform the Federated High. But the mutual fund apears to be less risky and, when comparing its historical volatility, Community Reinvestment Act is 1.03 times less risky than Federated High. The mutual fund trades about -0.48 of its potential returns per unit of risk. The Federated High Yield is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest  645.00  in Federated High Yield on October 10, 2024 and sell it today you would lose (8.00) from holding Federated High Yield or give up 1.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Community Reinvestment Act  vs.  Federated High Yield

Community Reinvestment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Community Reinvestment Act has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Community Reinvestment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Federated High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Community Reinvestment and Federated High

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

The idea behind Community Reinvestment Act and Federated High Yield 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.