Correlation Between Federated Hermes and Manning Napier

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

Diversification Opportunities for Federated Hermes and Manning Napier

0.76

Correlation Coefficient

Federated Hermes  Manning Napier

Poor diversification

The 3 months correlation between Federated and Manning is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Inflation and Manning Napier Overseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Overseas 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 Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Overseas has no effect on the direction of Federated Hermes i.e., Federated Hermes and Manning Napier go up and down completely randomly.

Pair Corralation between Federated Hermes and Manning Napier

Assuming the 90 days horizon Federated Hermes is expected to generate 1.8 times less return on investment than Manning Napier. But when comparing it to its historical volatility, Federated Hermes Inflation is 3.01 times less risky than Manning Napier. It trades about 0.1 of its potential returns per unit of risk. Manning Napier Overseas is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,359  in Manning Napier Overseas on December 4, 2024 and sell it today you would earn a total of  88.00  from holding Manning Napier Overseas or generate 2.62% return on investment over 90 days.

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

Federated Hermes Inflation  vs.  Manning Napier Overseas

Federated Hermes Inf

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Hermes Inflation are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. 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.

Manning Napier Overseas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Manning Napier Overseas are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Manning Napier 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 Manning Napier

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

The idea behind Federated Hermes Inflation and Manning Napier Overseas 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.