Correlation Between Federated Premier and Blackrock Floating

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

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

Diversification Opportunities for Federated Premier and Blackrock Floating

-0.75

Correlation Coefficient

Federated Premier  Blackrock Floating

Pay attention - limited upside

The 3 months correlation between Federated and Blackrock is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Blackrock Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Floating Rate and Federated Premier 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 Premier Municipal are associated (or correlated) with Blackrock Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Floating Rate has no effect on the direction of Federated Premier i.e., Federated Premier and Blackrock Floating go up and down completely randomly.

Pair Corralation between Federated Premier and Blackrock Floating

Considering the 90-day investment horizon Federated Premier Municipal is expected to under-perform the Blackrock Floating. In addition to that, Federated Premier is 1.18 times more volatile than Blackrock Floating Rate. It trades about -0.14 of its total potential returns per unit of risk. Blackrock Floating Rate is currently generating about 0.29 per unit of volatility. If you would invest  1,260  in Blackrock Floating Rate on September 3, 2024 and sell it today you would earn a total of  138.00  from holding Blackrock Floating Rate or generate 10.95% return on investment over 90 days.

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

Federated Premier Municipal  vs.  Blackrock Floating Rate

Federated Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Premier Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy primary indicators, Federated Premier is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Blackrock Floating Rate

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Floating Rate are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat inconsistent basic indicators, Blackrock Floating may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Federated Premier and Blackrock Floating

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

The idea behind Federated Premier Municipal and Blackrock Floating Rate 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.