Correlation Between Federated Short and Blackrock Global

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

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

Diversification Opportunities for Federated Short and Blackrock Global

0.35

Correlation Coefficient

Federated Short  Blackrock Global

Weak diversification

The 3 months correlation between Federated and Blackrock is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Intermediate D and Blackrock Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Global All and Federated Short 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 Short Intermediate Duration are associated (or correlated) with Blackrock Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Global All has no effect on the direction of Federated Short i.e., Federated Short and Blackrock Global go up and down completely randomly.

Pair Corralation between Federated Short and Blackrock Global

Assuming the 90 days horizon Federated Short Intermediate Duration is expected to generate 0.17 times more return on investment than Blackrock Global. However, Federated Short Intermediate Duration is 5.73 times less risky than Blackrock Global. It trades about -0.04 of its potential returns per unit of risk. Blackrock Global Allocation is currently generating about -0.14 per unit of risk. If you would invest  999.00  in Federated Short Intermediate Duration on October 6, 2024 and sell it today you would lose (2.00) from holding Federated Short Intermediate Duration or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Federated Short Intermediate D  vs.  Blackrock Global Allocation

Federated Short Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Short Intermediate Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Federated Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Global All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Global Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock Global 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 Short and Blackrock Global

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

The idea behind Federated Short Intermediate Duration and Blackrock Global Allocation 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.