Correlation Between Federated Hermes and Federated

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

By analyzing existing cross correlation between Federated Hermes Sdg and Federated U S, you can compare the effects of market volatilities on Federated Hermes and Federated 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 Federated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Federated.

Diversification Opportunities for Federated Hermes and Federated

-0.79

Correlation Coefficient

Federated Hermes  Federated

Pay attention - limited upside

The 3 months correlation between Federated and Federated is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Sdg and Federated U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated U S 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 Sdg are associated (or correlated) with Federated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated U S has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated go up and down completely randomly.

Pair Corralation between Federated Hermes and Federated

Assuming the 90 days horizon Federated Hermes Sdg is expected to under-perform the Federated. In addition to that, Federated Hermes is 3.89 times more volatile than Federated U S. It trades about -0.11 of its total potential returns per unit of risk. Federated U S is currently generating about 0.17 per unit of volatility. If you would invest  953.00  in Federated U S on December 30, 2024 and sell it today you would earn a total of  20.00  from holding Federated U S or generate 2.1% return on investment over 90 days.

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

Federated Hermes Sdg  vs.  Federated U S

Federated Hermes Sdg

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federated Hermes Sdg has generated negative risk-adjusted returns adding no value to fund investors. 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.

Federated U S

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated U S are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Federated 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 Federated

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

The idea behind Federated Hermes Sdg and Federated U S 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.