Correlation Between Jacob Micro and Federated Global

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

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

Diversification Opportunities for Jacob Micro and Federated Global

0.38

Correlation Coefficient

Jacob Micro  Federated Global

Weak diversification

The 3 months correlation between Jacob and Federated is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Jacob Micro Cap and Federated Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Global All and Jacob Micro 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 Jacob Micro Cap are associated (or correlated) with Federated Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Global All has no effect on the direction of Jacob Micro i.e., Jacob Micro and Federated Global go up and down completely randomly.

Pair Corralation between Jacob Micro and Federated Global

Assuming the 90 days horizon Jacob Micro Cap is expected to generate 3.05 times more return on investment than Federated Global. However, Jacob Micro is 3.05 times more volatile than Federated Global Allocation. It trades about 0.12 of its potential returns per unit of risk. Federated Global Allocation is currently generating about 0.02 per unit of risk. If you would invest  2,424  in Jacob Micro Cap on October 23, 2024 and sell it today you would earn a total of  274.00  from holding Jacob Micro Cap or generate 11.3% return on investment over 90 days.

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

Jacob Micro Cap  vs.  Federated Global Allocation

Jacob Micro Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacob Micro Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Jacob Micro may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Federated Global All

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Global Allocation are ranked lower than 1 (%) 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.

Pair Trading with Jacob Micro and Federated Global

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

The idea behind Jacob Micro Cap and Federated Global Allocation 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .