Correlation Between Federated Hermes and Gold Portfolio

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

By analyzing existing cross correlation between Federated Hermes Conservative and Gold Portfolio Fidelity, you can compare the effects of market volatilities on Federated Hermes and Gold Portfolio 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 Hermes with a short position of Gold Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Gold Portfolio.

Diversification Opportunities for Federated Hermes and Gold Portfolio

0.89

Correlation Coefficient

Federated Hermes  Gold Portfolio

Very poor diversification

The 3 months correlation between Federated and Gold is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Conservative and Gold Portfolio Fidelity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Portfolio Fidelity and Federated Hermes 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 Hermes Conservative are associated (or correlated) with Gold Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Portfolio Fidelity has no effect on the direction of Federated Hermes i.e., Federated Hermes and Gold Portfolio go up and down completely randomly.

Pair Corralation between Federated Hermes and Gold Portfolio

Assuming the 90 days horizon Federated Hermes is expected to generate 21.05 times less return on investment than Gold Portfolio. But when comparing it to its historical volatility, Federated Hermes Conservative is 16.4 times less risky than Gold Portfolio. It trades about 0.23 of its potential returns per unit of risk. Gold Portfolio Fidelity is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,335  in Gold Portfolio Fidelity on December 21, 2024 and sell it today you would earn a total of  717.00  from holding Gold Portfolio Fidelity or generate 30.71% return on investment over 90 days.

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

Federated Hermes Conservative  vs.  Gold Portfolio Fidelity

Federated Hermes Con

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Hermes Conservative are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Hermes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gold Portfolio Fidelity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Portfolio Fidelity are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gold Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federated Hermes and Gold Portfolio

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

The idea behind Federated Hermes Conservative and Gold Portfolio Fidelity 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.