Correlation Between Federated International and Doubleline Yield

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

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

Diversification Opportunities for Federated International and Doubleline Yield

0.25

Correlation Coefficient

Federated International  Doubleline Yield

Modest diversification

The 3 months correlation between FEDERATED and Doubleline is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Federated International Leader and Doubleline Yield Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubleline Yield Opp and Federated International 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 Federated International Leaders are associated (or correlated) with Doubleline Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubleline Yield Opp has no effect on the direction of Federated International i.e., Federated International and Doubleline Yield go up and down completely randomly.

Pair Corralation between Federated International and Doubleline Yield

Assuming the 90 days horizon Federated International Leaders is expected to generate 5.63 times more return on investment than Doubleline Yield. However, Federated International is 5.63 times more volatile than Doubleline Yield Opportunities. It trades about 0.25 of its potential returns per unit of risk. Doubleline Yield Opportunities is currently generating about -0.05 per unit of risk. If you would invest  3,515  in Federated International Leaders on December 22, 2024 and sell it today you would earn a total of  557.00  from holding Federated International Leaders or generate 15.85% return on investment over 90 days.

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

Federated International Leader  vs.  Doubleline Yield Opportunities

Federated International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated International Leaders are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Federated International showed solid returns over the last few months and may actually be approaching a breakup point.

Doubleline Yield Opp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Federated International and Doubleline Yield

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

The idea behind Federated International Leaders and Doubleline Yield Opportunities 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.