Correlation Between Morningstar Global and Federated Strategic

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Morningstar Global and Federated Strategic 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 Morningstar Global and Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morningstar Global Income and Federated Strategic Value, you can compare the effects of market volatilities on Morningstar Global and Federated Strategic 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 Morningstar Global with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morningstar Global and Federated Strategic.

Diversification Opportunities for Morningstar Global and Federated Strategic

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Morningstar and Federated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Global Income and Federated Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic Value and Morningstar Global 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 Morningstar Global Income are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic Value has no effect on the direction of Morningstar Global i.e., Morningstar Global and Federated Strategic go up and down completely randomly.

Pair Corralation between Morningstar Global and Federated Strategic

Assuming the 90 days horizon Morningstar Global Income is expected to generate 0.57 times more return on investment than Federated Strategic. However, Morningstar Global Income is 1.74 times less risky than Federated Strategic. It trades about -0.13 of its potential returns per unit of risk. Federated Strategic Value is currently generating about -0.19 per unit of risk. If you would invest  942.00  in Morningstar Global Income on October 6, 2024 and sell it today you would lose (20.00) from holding Morningstar Global Income or give up 2.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Morningstar Global Income  vs.  Federated Strategic Value

 Performance 
       Timeline  
Morningstar Global Income 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Morningstar Global Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Morningstar Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Federated Strategic Value 

Risk-Adjusted Performance

0 of 100

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

Morningstar Global and Federated Strategic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Morningstar Global and Federated Strategic

The main advantage of trading using opposite Morningstar Global and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morningstar Global position performs unexpectedly, Federated Strategic 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 Strategic will offset losses from the drop in Federated Strategic's long position.
The idea behind Morningstar Global Income and Federated Strategic Value 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

Other Complementary Tools

Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Bonds Directory
Find actively traded corporate debentures issued by US companies
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments