Correlation Between NYSE Composite and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federated Hermes 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 NYSE Composite and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Federated Hermes Mdt, you can compare the effects of market volatilities on NYSE Composite and Federated Hermes 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 NYSE Composite with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federated Hermes.
Diversification Opportunities for NYSE Composite and Federated Hermes
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Federated is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federated Hermes Mdt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Mdt and NYSE Composite 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 NYSE Composite are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Mdt has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federated Hermes go up and down completely randomly.
Pair Corralation between NYSE Composite and Federated Hermes
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.81 times more return on investment than Federated Hermes. However, NYSE Composite is 1.81 times more volatile than Federated Hermes Mdt. It trades about 0.14 of its potential returns per unit of risk. Federated Hermes Mdt is currently generating about 0.15 per unit of risk. If you would invest 1,532,955 in NYSE Composite on September 6, 2024 and sell it today you would earn a total of 485,905 from holding NYSE Composite or generate 31.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. Federated Hermes Mdt
Performance |
Timeline |
NYSE Composite and Federated Hermes Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Federated Hermes Mdt
Pair trading matchups for Federated Hermes
Pair Trading with NYSE Composite and Federated Hermes
The main advantage of trading using opposite NYSE Composite and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.NYSE Composite vs. Spyre Therapeutics | NYSE Composite vs. Tarsus Pharmaceuticals | NYSE Composite vs. Genfit | NYSE Composite vs. Eastern Co |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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