Correlation Between Federated Intermediate and Guidemark Large

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

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

Diversification Opportunities for Federated Intermediate and Guidemark Large

0.46

Correlation Coefficient

Federated Intermediate  Guidemark Large

Very weak diversification

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

Pair Corralation between Federated Intermediate and Guidemark Large

Assuming the 90 days horizon Federated Intermediate Municipal is expected to generate 0.23 times more return on investment than Guidemark Large. However, Federated Intermediate Municipal is 4.29 times less risky than Guidemark Large. It trades about -0.12 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about -0.21 per unit of risk. If you would invest  980.00  in Federated Intermediate Municipal on October 4, 2024 and sell it today you would lose (14.00) from holding Federated Intermediate Municipal or give up 1.43% of portfolio value over 90 days.

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

Federated Intermediate Municip  vs.  Guidemark Large Cap

Federated Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Intermediate Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Federated Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidemark Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Intermediate and Guidemark Large

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

The idea behind Federated Intermediate Municipal and Guidemark 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.