Correlation Between Federated Intermediate and Rbc Microcap

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

Diversification Opportunities for Federated Intermediate and Rbc Microcap

0.67

Correlation Coefficient

Federated Intermediate  Rbc Microcap

Poor diversification

The 3 months correlation between Federated and Rbc is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Federated Intermediate Municip and Rbc Microcap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Microcap Value 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 Rbc Microcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Microcap Value has no effect on the direction of Federated Intermediate i.e., Federated Intermediate and Rbc Microcap go up and down completely randomly.

Pair Corralation between Federated Intermediate and Rbc Microcap

Assuming the 90 days horizon Federated Intermediate Municipal is expected to generate 0.12 times more return on investment than Rbc Microcap. However, Federated Intermediate Municipal is 8.36 times less risky than Rbc Microcap. It trades about 0.03 of its potential returns per unit of risk. Rbc Microcap Value is currently generating about -0.03 per unit of risk. If you would invest  962.00  in Federated Intermediate Municipal on October 26, 2024 and sell it today you would earn a total of  3.00  from holding Federated Intermediate Municipal or generate 0.31% return on investment over 90 days.

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

Federated Intermediate Municip  vs.  Rbc Microcap Value

Federated Intermediate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Intermediate Municipal are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Rbc Microcap Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc Microcap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rbc Microcap 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 Intermediate and Rbc Microcap

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

The idea behind Federated Intermediate Municipal and Rbc Microcap Value 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.