Correlation Between Federated Fund and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both Federated Fund and Federated Kaufmann 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 Fund and Federated Kaufmann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Fund For and Federated Kaufmann Small, you can compare the effects of market volatilities on Federated Fund and Federated Kaufmann 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 Fund with a short position of Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Fund and Federated Kaufmann.
Diversification Opportunities for Federated Fund and Federated Kaufmann
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federated and Federated is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Federated Fund For and Federated Kaufmann Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Small and Federated Fund 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 Fund For are associated (or correlated) with Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann Small has no effect on the direction of Federated Fund i.e., Federated Fund and Federated Kaufmann go up and down completely randomly.
Pair Corralation between Federated Fund and Federated Kaufmann
Assuming the 90 days horizon Federated Fund For is expected to generate 0.23 times more return on investment than Federated Kaufmann. However, Federated Fund For is 4.35 times less risky than Federated Kaufmann. It trades about 0.03 of its potential returns per unit of risk. Federated Kaufmann Small is currently generating about -0.21 per unit of risk. If you would invest 621.00 in Federated Fund For on December 4, 2024 and sell it today you would earn a total of 3.00 from holding Federated Fund For or generate 0.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Federated Fund For vs. Federated Kaufmann Small
Performance |
Timeline |
Federated Fund For |
Federated Kaufmann Small |
Federated Fund and Federated Kaufmann Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Fund and Federated Kaufmann
The main advantage of trading using opposite Federated Fund and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Fund position performs unexpectedly, Federated Kaufmann 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 Federated Kaufmann will offset losses from the drop in Federated Kaufmann's long position.Federated Fund vs. Vanguard Information Technology | Federated Fund vs. Columbia Global Technology | Federated Fund vs. Baron Select Funds | Federated Fund vs. Pgim Jennison Technology |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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