Correlation Between Federated Pennsylvania and Crm Smallmid

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

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

Diversification Opportunities for Federated Pennsylvania and Crm Smallmid

0.28

Correlation Coefficient

Federated Pennsylvania  Crm Smallmid

Modest diversification

The 3 months correlation between Federated and Crm is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Federated Pennsylvania Municip and Crm Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crm Smallmid Cap and Federated Pennsylvania 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 Federated Pennsylvania Municipal are associated (or correlated) with Crm Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crm Smallmid Cap has no effect on the direction of Federated Pennsylvania i.e., Federated Pennsylvania and Crm Smallmid go up and down completely randomly.

Pair Corralation between Federated Pennsylvania and Crm Smallmid

Assuming the 90 days horizon Federated Pennsylvania is expected to generate 1.85 times less return on investment than Crm Smallmid. But when comparing it to its historical volatility, Federated Pennsylvania Municipal is 5.59 times less risky than Crm Smallmid. It trades about 0.07 of its potential returns per unit of risk. Crm Smallmid Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  998.00  in Crm Smallmid Cap on December 2, 2024 and sell it today you would earn a total of  97.00  from holding Crm Smallmid Cap or generate 9.72% return on investment over 90 days.

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

Federated Pennsylvania Municip  vs.  Crm Smallmid Cap

Federated Pennsylvania

Risk-Adjusted Performance

Very Weak

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

Crm Smallmid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crm Smallmid 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 basic 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.

Pair Trading with Federated Pennsylvania and Crm Smallmid

The main advantage of trading using opposite Federated Pennsylvania and Crm Smallmid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Pennsylvania position performs unexpectedly, Crm Smallmid 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 Crm Smallmid will offset losses from the drop in Crm Smallmid's long position.

The idea behind Federated Pennsylvania Municipal and Crm Smallmid Cap 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 CEOs Directory module to screen CEOs from public companies around the world.