Correlation Between M Large and Federated Mdt

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

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

Diversification Opportunities for M Large and Federated Mdt

0.12

Correlation Coefficient

M Large  Federated Mdt

Average diversification

The 3 months correlation between MTCGX and Federated is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap 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 M Large 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 M Large Cap 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 M Large i.e., M Large and Federated Mdt go up and down completely randomly.

Pair Corralation between M Large and Federated Mdt

Assuming the 90 days horizon M Large Cap is expected to under-perform the Federated Mdt. In addition to that, M Large is 2.63 times more volatile than Federated Mdt Large. It trades about -0.14 of its total potential returns per unit of risk. Federated Mdt Large is currently generating about 0.01 per unit of volatility. If you would invest  3,130  in Federated Mdt Large on December 24, 2024 and sell it today you would earn a total of  11.00  from holding Federated Mdt Large or generate 0.35% return on investment over 90 days.

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

M Large Cap  vs.  Federated Mdt Large

M Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days M Large Cap 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 technical and fundamental indicators 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.

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 fairly strong essential indicators, Federated Mdt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with M Large and Federated Mdt

The main advantage of trading using opposite M Large and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Large 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 M Large Cap 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.