Correlation Between Federated Global and Rational/pier

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

By analyzing existing cross correlation between Federated Global Allocation and Rationalpier 88 Convertible, you can compare the effects of market volatilities on Federated Global and Rational/pier 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 Global with a short position of Rational/pier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Rational/pier.

Diversification Opportunities for Federated Global and Rational/pier

0.84

Correlation Coefficient

Federated Global  Rational/pier

Very poor diversification

The 3 months correlation between Federated and Rational/pier is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Rationalpier 88 Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rationalpier 88 Conv and Federated Global 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 Global Allocation are associated (or correlated) with Rational/pier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rationalpier 88 Conv has no effect on the direction of Federated Global i.e., Federated Global and Rational/pier go up and down completely randomly.

Pair Corralation between Federated Global and Rational/pier

Assuming the 90 days horizon Federated Global is expected to generate 1.12 times less return on investment than Rational/pier. In addition to that, Federated Global is 1.02 times more volatile than Rationalpier 88 Convertible. It trades about 0.05 of its total potential returns per unit of risk. Rationalpier 88 Convertible is currently generating about 0.06 per unit of volatility. If you would invest  1,113  in Rationalpier 88 Convertible on October 25, 2024 and sell it today you would earn a total of  20.00  from holding Rationalpier 88 Convertible or generate 1.8% return on investment over 90 days.

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

Federated Global Allocation  vs.  Rationalpier 88 Convertible

Federated Global All

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Global Allocation are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Federated Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rationalpier 88 Conv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rationalpier 88 Convertible are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Rational/pier 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 Global and Rational/pier

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

The idea behind Federated Global Allocation and Rationalpier 88 Convertible 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.