Correlation Between Federated Hermes and Columbia Emerging

Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Columbia Emerging 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 Columbia Emerging 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 Columbia Emerging Markets, you can compare the effects of market volatilities on Federated Hermes and Columbia Emerging 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 Columbia Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Columbia Emerging.

Diversification Opportunities for Federated Hermes and Columbia Emerging

0.46

Correlation Coefficient

Federated Hermes  Columbia Emerging

Very weak diversification

The 3 months correlation between Federated and Columbia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Conservative and Columbia Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Emerging Markets 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 Columbia Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Emerging Markets has no effect on the direction of Federated Hermes i.e., Federated Hermes and Columbia Emerging go up and down completely randomly.

Pair Corralation between Federated Hermes and Columbia Emerging

Assuming the 90 days horizon Federated Hermes Conservative is expected to generate 0.04 times more return on investment than Columbia Emerging. However, Federated Hermes Conservative is 25.52 times less risky than Columbia Emerging. It trades about 0.13 of its potential returns per unit of risk. Columbia Emerging Markets is currently generating about -0.02 per unit of risk. If you would invest  1,001  in Federated Hermes Conservative on December 4, 2024 and sell it today you would earn a total of  1.00  from holding Federated Hermes Conservative or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Federated Hermes Conservative  vs.  Columbia Emerging Markets

Federated Hermes Con

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Hermes Conservative are ranked lower than 14 (%) 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.

Columbia Emerging Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Columbia Emerging 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 Hermes and Columbia Emerging

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

The idea behind Federated Hermes Conservative and Columbia Emerging Markets 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.