Correlation Between Cresud SACIF and Federated Municipal

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

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

Diversification Opportunities for Cresud SACIF and Federated Municipal

0.8

Correlation Coefficient

Cresud SACIF  Federated Municipal

Very poor diversification

The 3 months correlation between Cresud and Federated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cresud SACIF y and Federated Municipal Ultrashort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Municipal and Cresud SACIF 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 Cresud SACIF y are associated (or correlated) with Federated Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Municipal has no effect on the direction of Cresud SACIF i.e., Cresud SACIF and Federated Municipal go up and down completely randomly.

Pair Corralation between Cresud SACIF and Federated Municipal

Assuming the 90 days horizon Cresud SACIF y is expected to generate 55.58 times more return on investment than Federated Municipal. However, Cresud SACIF is 55.58 times more volatile than Federated Municipal Ultrashort. It trades about 0.06 of its potential returns per unit of risk. Federated Municipal Ultrashort is currently generating about -0.18 per unit of risk. If you would invest  1,298  in Cresud SACIF y on October 5, 2024 and sell it today you would earn a total of  40.00  from holding Cresud SACIF y or generate 3.08% return on investment over 90 days.

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

Cresud SACIF y  vs.  Federated Municipal Ultrashort

Cresud SACIF y

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cresud SACIF y are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Cresud SACIF showed solid returns over the last few months and may actually be approaching a breakup point.

Federated Municipal

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Municipal Ultrashort are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cresud SACIF and Federated Municipal

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

The idea behind Cresud SACIF y and Federated Municipal Ultrashort 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.