Correlation Between Federated Government and Jpmorgan Government
Can any of the company-specific risk be diversified away by investing in both Federated Government and Jpmorgan Government 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 Government and Jpmorgan Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Government Income and Jpmorgan Government Bond, you can compare the effects of market volatilities on Federated Government and Jpmorgan Government 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 Government with a short position of Jpmorgan Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Jpmorgan Government.
Diversification Opportunities for Federated Government and Jpmorgan Government
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Federated and Jpmorgan is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Income and Jpmorgan Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Government Bond and Federated Government 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 Government Income are associated (or correlated) with Jpmorgan Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Government Bond has no effect on the direction of Federated Government i.e., Federated Government and Jpmorgan Government go up and down completely randomly.
Pair Corralation between Federated Government and Jpmorgan Government
Assuming the 90 days horizon Federated Government Income is expected to generate 1.15 times more return on investment than Jpmorgan Government. However, Federated Government is 1.15 times more volatile than Jpmorgan Government Bond. It trades about 0.06 of its potential returns per unit of risk. Jpmorgan Government Bond is currently generating about 0.06 per unit of risk. If you would invest 888.00 in Federated Government Income on December 4, 2024 and sell it today you would earn a total of 10.00 from holding Federated Government Income or generate 1.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Federated Government Income vs. Jpmorgan Government Bond
Performance |
Timeline |
Federated Government |
Jpmorgan Government Bond |
Federated Government and Jpmorgan Government Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Government and Jpmorgan Government
The main advantage of trading using opposite Federated Government and Jpmorgan Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Jpmorgan Government 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 Jpmorgan Government will offset losses from the drop in Jpmorgan Government's long position.Federated Government vs. Advent Claymore Convertible | Federated Government vs. Fidelity Vertible Securities | Federated Government vs. Harbor Vertible Securities | Federated Government vs. The Gamco Global |
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Check out your portfolio center.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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