Correlation Between Federated Ultrashort and Growth Fund

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

By analyzing existing cross correlation between Federated Ultrashort Bond and Growth Fund Of, you can compare the effects of market volatilities on Federated Ultrashort and Growth Fund 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 Ultrashort with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ultrashort and Growth Fund.

Diversification Opportunities for Federated Ultrashort and Growth Fund

-0.56

Correlation Coefficient

Federated Ultrashort  Growth Fund

Excellent diversification

The 3 months correlation between Federated and Growth is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ultrashort Bond and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Federated Ultrashort 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 Ultrashort Bond are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Federated Ultrashort i.e., Federated Ultrashort and Growth Fund go up and down completely randomly.

Pair Corralation between Federated Ultrashort and Growth Fund

Assuming the 90 days horizon Federated Ultrashort Bond is expected to generate 0.09 times more return on investment than Growth Fund. However, Federated Ultrashort Bond is 11.59 times less risky than Growth Fund. It trades about 0.22 of its potential returns per unit of risk. Growth Fund Of is currently generating about -0.08 per unit of risk. If you would invest  915.00  in Federated Ultrashort Bond on December 30, 2024 and sell it today you would earn a total of  14.00  from holding Federated Ultrashort Bond or generate 1.53% return on investment over 90 days.

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

Federated Ultrashort Bond  vs.  Growth Fund Of

Federated Ultrashort Bond

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Ultrashort Bond are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Federated Ultrashort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Growth Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Growth Fund Of has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Federated Ultrashort and Growth Fund

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

The idea behind Federated Ultrashort Bond and Growth Fund Of 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.