Correlation Between Federated Premier and Marygold Companies

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

Diversification Opportunities for Federated Premier and Marygold Companies

-0.25

Correlation Coefficient

Federated Premier  Marygold Companies

Very good diversification

The 3 months correlation between Federated and Marygold is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Marygold Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marygold Companies 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 Marygold Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marygold Companies has no effect on the direction of Federated Premier i.e., Federated Premier and Marygold Companies go up and down completely randomly.

Pair Corralation between Federated Premier and Marygold Companies

Considering the 90-day investment horizon Federated Premier is expected to generate 13.05 times less return on investment than Marygold Companies. But when comparing it to its historical volatility, Federated Premier Municipal is 11.63 times less risky than Marygold Companies. It trades about 0.03 of its potential returns per unit of risk. Marygold Companies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  154.00  in Marygold Companies on October 8, 2024 and sell it today you would earn a total of  26.95  from holding Marygold Companies or generate 17.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Federated Premier Municipal  vs.  Marygold Companies

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 latest unfluctuating performance, the Fund's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Marygold Companies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marygold Companies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent essential indicators, Marygold Companies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federated Premier and Marygold Companies

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

The idea behind Federated Premier Municipal and Marygold Companies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.