Correlation Between Federated Mdt and Guggenheim Large

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

By analyzing existing cross correlation between Federated Mdt Mid Cap and Guggenheim Large Cap, you can compare the effects of market volatilities on Federated Mdt and Guggenheim Large 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 Mdt with a short position of Guggenheim Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mdt and Guggenheim Large.

Diversification Opportunities for Federated Mdt and Guggenheim Large

0.47

Correlation Coefficient

Federated Mdt  Guggenheim Large

Very weak diversification

The 3 months correlation between Federated and Guggenheim is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt Mid Cap and Guggenheim Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Large Cap and Federated Mdt 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 Mdt Mid Cap are associated (or correlated) with Guggenheim Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Large Cap has no effect on the direction of Federated Mdt i.e., Federated Mdt and Guggenheim Large go up and down completely randomly.

Pair Corralation between Federated Mdt and Guggenheim Large

Assuming the 90 days horizon Federated Mdt Mid Cap is expected to generate 1.09 times more return on investment than Guggenheim Large. However, Federated Mdt is 1.09 times more volatile than Guggenheim Large Cap. It trades about 0.09 of its potential returns per unit of risk. Guggenheim Large Cap is currently generating about -0.11 per unit of risk. If you would invest  5,051  in Federated Mdt Mid Cap on October 8, 2024 and sell it today you would earn a total of  373.00  from holding Federated Mdt Mid Cap or generate 7.38% return on investment over 90 days.

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

Federated Mdt Mid Cap  vs.  Guggenheim Large Cap

Federated Mdt Mid

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt Mid Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Federated Mdt may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Guggenheim Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Federated Mdt and Guggenheim Large

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

The idea behind Federated Mdt Mid Cap and Guggenheim Large Cap 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.