Correlation Between Federated Max-cap and Wisdomtree Siegel

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

By analyzing existing cross correlation between Federated Max Cap Index and Wisdomtree Siegel Global, you can compare the effects of market volatilities on Federated Max-cap and Wisdomtree Siegel 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 Max-cap with a short position of Wisdomtree Siegel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Max-cap and Wisdomtree Siegel.

Diversification Opportunities for Federated Max-cap and Wisdomtree Siegel

0.69

Correlation Coefficient

Federated Max-cap  Wisdomtree Siegel

Poor diversification

The 3 months correlation between Federated and Wisdomtree is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Federated Max Cap Index and Wisdomtree Siegel Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wisdomtree Siegel Global and Federated Max-cap 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 Max Cap Index are associated (or correlated) with Wisdomtree Siegel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wisdomtree Siegel Global has no effect on the direction of Federated Max-cap i.e., Federated Max-cap and Wisdomtree Siegel go up and down completely randomly.

Pair Corralation between Federated Max-cap and Wisdomtree Siegel

Assuming the 90 days horizon Federated Max Cap Index is expected to generate 2.03 times more return on investment than Wisdomtree Siegel. However, Federated Max-cap is 2.03 times more volatile than Wisdomtree Siegel Global. It trades about 0.02 of its potential returns per unit of risk. Wisdomtree Siegel Global is currently generating about -0.1 per unit of risk. If you would invest  685.00  in Federated Max Cap Index on October 11, 2024 and sell it today you would earn a total of  65.00  from holding Federated Max Cap Index or generate 9.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	11.29%
Values	Daily Returns

Federated Max Cap Index  vs.  Wisdomtree Siegel Global

Federated Max Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Max Cap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Wisdomtree Siegel Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Federated Max Cap Index and Wisdomtree Siegel Global 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..