Correlation Between T Rowe and Federated Short-intermedia

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

By analyzing existing cross correlation between T Rowe Price and Federated Short Intermediate Duration, you can compare the effects of market volatilities on T Rowe and Federated Short-intermedia 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 T Rowe with a short position of Federated Short-intermedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Federated Short-intermedia.

Diversification Opportunities for T Rowe and Federated Short-intermedia

0.78

Correlation Coefficient

T Rowe  Federated Short-intermedia

Poor diversification

The 3 months correlation between PATFX and Federated is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Federated Short Intermediate D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short-intermedia and T Rowe 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 T Rowe Price are associated (or correlated) with Federated Short-intermedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short-intermedia has no effect on the direction of T Rowe i.e., T Rowe and Federated Short-intermedia go up and down completely randomly.

Pair Corralation between T Rowe and Federated Short-intermedia

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Federated Short-intermedia. In addition to that, T Rowe is 2.16 times more volatile than Federated Short Intermediate Duration. It trades about -0.01 of its total potential returns per unit of risk. Federated Short Intermediate Duration is currently generating about 0.07 per unit of volatility. If you would invest  998.00  in Federated Short Intermediate Duration on November 28, 2024 and sell it today you would earn a total of  5.00  from holding Federated Short Intermediate Duration or generate 0.5% return on investment over 90 days.

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

T Rowe Price  vs.  Federated Short Intermediate D

T Rowe Price

Risk-Adjusted Performance

Very Weak

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

Federated Short-intermedia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Short Intermediate Duration are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Federated Short-intermedia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with T Rowe and Federated Short-intermedia

The main advantage of trading using opposite T Rowe and Federated Short-intermedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Federated Short-intermedia 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 Short-intermedia will offset losses from the drop in Federated Short-intermedia's long position.

The idea behind T Rowe Price and Federated Short Intermediate Duration 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.