Correlation Between Federated Hermes and Nuveen Pennsylvania

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

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

Diversification Opportunities for Federated Hermes and Nuveen Pennsylvania

0.65

Correlation Coefficient

Federated Hermes  Nuveen Pennsylvania

Poor diversification

The 3 months correlation between Federated and Nuveen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Inflation and Nuveen Pennsylvania Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Pennsylvania 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 Inflation are associated (or correlated) with Nuveen Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Pennsylvania has no effect on the direction of Federated Hermes i.e., Federated Hermes and Nuveen Pennsylvania go up and down completely randomly.

Pair Corralation between Federated Hermes and Nuveen Pennsylvania

Assuming the 90 days horizon Federated Hermes Inflation is expected to under-perform the Nuveen Pennsylvania. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Hermes Inflation is 1.11 times less risky than Nuveen Pennsylvania. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Nuveen Pennsylvania Municipal is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,038  in Nuveen Pennsylvania Municipal on September 15, 2024 and sell it today you would lose (14.00) from holding Nuveen Pennsylvania Municipal or give up 1.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Federated Hermes Inflation  vs.  Nuveen Pennsylvania Municipal

Federated Hermes Inf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Hermes Inflation 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.

Nuveen Pennsylvania

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Pennsylvania Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Nuveen Pennsylvania 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 Nuveen Pennsylvania

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

The idea behind Federated Hermes Inflation and Nuveen Pennsylvania Municipal 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.