Correlation Between Qs Us and Federated Kaufmann

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

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

Diversification Opportunities for Qs Us and Federated Kaufmann

0.99

Correlation Coefficient

Qs Us  Federated Kaufmann

No risk reduction

The 3 months correlation between LMBMX and Federated is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Qs Small Capitalization and Federated Kaufmann Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Small and Qs Us 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 Qs Small Capitalization 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 Small has no effect on the direction of Qs Us i.e., Qs Us and Federated Kaufmann go up and down completely randomly.

Pair Corralation between Qs Us and Federated Kaufmann

Assuming the 90 days horizon Qs Small Capitalization is expected to generate 0.83 times more return on investment than Federated Kaufmann. However, Qs Small Capitalization is 1.2 times less risky than Federated Kaufmann. It trades about -0.11 of its potential returns per unit of risk. Federated Kaufmann Small is currently generating about -0.11 per unit of risk. If you would invest  1,328  in Qs Small Capitalization on December 30, 2024 and sell it today you would lose (112.00) from holding Qs Small Capitalization or give up 8.43% of portfolio value over 90 days.

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

Qs Small Capitalization  vs.  Federated Kaufmann Small

Qs Small Capitalization

Risk-Adjusted Performance

Very Weak

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

Federated Kaufmann Small

Risk-Adjusted Performance

Very Weak

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

The main advantage of trading using opposite Qs Us and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Us 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 Qs Small Capitalization and Federated Kaufmann 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.