Correlation Between Value Fund and Federated Kaufmann

Can any of the company-specific risk be diversified away by investing in both Value 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 Value 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 Value Fund Value and Federated Kaufmann Large, you can compare the effects of market volatilities on Value 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 Value Fund with a short position of Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Fund and Federated Kaufmann.

Diversification Opportunities for Value Fund and Federated Kaufmann

0.95

Correlation Coefficient

Value Fund  Federated Kaufmann

Almost no diversification

The 3 months correlation between Value and FEDERATED is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Value and Federated Kaufmann Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Large and Value 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 Value Fund Value 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 Large has no effect on the direction of Value Fund i.e., Value Fund and Federated Kaufmann go up and down completely randomly.

Pair Corralation between Value Fund and Federated Kaufmann

Assuming the 90 days horizon Value Fund is expected to generate 1.66 times less return on investment than Federated Kaufmann. But when comparing it to its historical volatility, Value Fund Value is 1.38 times less risky than Federated Kaufmann. It trades about 0.17 of its potential returns per unit of risk. Federated Kaufmann Large is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,778  in Federated Kaufmann Large on September 2, 2024 and sell it today you would earn a total of  221.00  from holding Federated Kaufmann Large or generate 12.43% return on investment over 90 days.

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

Value Fund Value  vs.  Federated Kaufmann Large

Value Fund Value

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Value Fund Value are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Value Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Federated Kaufmann Large

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Kaufmann Large are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Federated Kaufmann may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Value Fund and Federated Kaufmann

The main advantage of trading using opposite Value Fund and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value 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.

The idea behind Value Fund Value and Federated Kaufmann Large 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..