Correlation Between William Blair and Federated Mdt

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

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

Diversification Opportunities for William Blair and Federated Mdt

0.71

Correlation Coefficient

William Blair  Federated Mdt

Poor diversification

The 3 months correlation between William and Federated is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Large and Federated Mdt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Large and William Blair 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 William Blair Large 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 Large has no effect on the direction of William Blair i.e., William Blair and Federated Mdt go up and down completely randomly.

Pair Corralation between William Blair and Federated Mdt

Assuming the 90 days horizon William Blair is expected to generate 1.62 times less return on investment than Federated Mdt. In addition to that, William Blair is 1.09 times more volatile than Federated Mdt Large. It trades about 0.01 of its total potential returns per unit of risk. Federated Mdt Large is currently generating about 0.02 per unit of volatility. If you would invest  3,104  in Federated Mdt Large on December 2, 2024 and sell it today you would earn a total of  145.00  from holding Federated Mdt Large or generate 4.67% return on investment over 90 days.

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

William Blair Large  vs.  Federated Mdt Large

William Blair Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Blair Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Federated Mdt Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federated Mdt 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 forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with William Blair and Federated Mdt

The main advantage of trading using opposite William Blair and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair 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 William Blair Large and Federated Mdt 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.