Correlation Between Federated Kaufmann and Federated International

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

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

Diversification Opportunities for Federated Kaufmann and Federated International

0.57

Correlation Coefficient

Federated Kaufmann  Federated International

Very weak diversification

The 3 months correlation between Federated and Federated is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Large and Federated International Leader in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated International and Federated Kaufmann 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 Kaufmann Large are associated (or correlated) with Federated International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated International has no effect on the direction of Federated Kaufmann i.e., Federated Kaufmann and Federated International go up and down completely randomly.

Pair Corralation between Federated Kaufmann and Federated International

Assuming the 90 days horizon Federated Kaufmann Large is expected to generate 1.36 times more return on investment than Federated International. However, Federated Kaufmann is 1.36 times more volatile than Federated International Leaders. It trades about -0.03 of its potential returns per unit of risk. Federated International Leaders is currently generating about -0.37 per unit of risk. If you would invest  1,708  in Federated Kaufmann Large on October 9, 2024 and sell it today you would lose (14.00) from holding Federated Kaufmann Large or give up 0.82% of portfolio value over 90 days.

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

Federated Kaufmann Large  vs.  Federated International Leader

Federated Kaufmann Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Kaufmann Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Federated International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated International Leaders has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Kaufmann and Federated International

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

The idea behind Federated Kaufmann Large and Federated International Leaders 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.