Correlation Between Federated International and Federated Mdt

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

By analyzing existing cross correlation between Federated International Small Mid and Federated Mdt Small, you can compare the effects of market volatilities on Federated International and Federated Mdt 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 International with a short position of Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated International and Federated Mdt.

Diversification Opportunities for Federated International and Federated Mdt

0.22

Correlation Coefficient

Federated International  Federated Mdt

Modest diversification

The 3 months correlation between Federated and Federated is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Federated International Small and Federated Mdt Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Small and Federated International 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 International Small Mid are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Small has no effect on the direction of Federated International i.e., Federated International and Federated Mdt go up and down completely randomly.

Pair Corralation between Federated International and Federated Mdt

Assuming the 90 days horizon Federated International Small Mid is expected to under-perform the Federated Mdt. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated International Small Mid is 1.76 times less risky than Federated Mdt. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Federated Mdt Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,541  in Federated Mdt Small on October 8, 2024 and sell it today you would earn a total of  118.00  from holding Federated Mdt Small or generate 4.64% return on investment over 90 days.

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

Federated International Small   vs.  Federated Mdt Small

Federated International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated International Small Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Federated International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Mdt Small

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt Small are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Federated Mdt 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 International and Federated Mdt

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

The idea behind Federated International Small Mid and Federated Mdt Small 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.