Correlation Between Federated Prudent and Abr 75/25

Can any of the company-specific risk be diversified away by investing in both Federated Prudent and Abr 75/25 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 Prudent and Abr 75/25 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federated Prudent Bear and Abr 7525 Volatility, you can compare the effects of market volatilities on Federated Prudent and Abr 75/25 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 Prudent with a short position of Abr 75/25. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Prudent and Abr 75/25.

Diversification Opportunities for Federated Prudent and Abr 75/25

-0.79

Correlation Coefficient

Federated Prudent  Abr 75/25

Pay attention - limited upside

The 3 months correlation between Federated and Abr is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Federated Prudent Bear and Abr 7525 Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abr 7525 Volatility and Federated Prudent 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 Prudent Bear are associated (or correlated) with Abr 75/25. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abr 7525 Volatility has no effect on the direction of Federated Prudent i.e., Federated Prudent and Abr 75/25 go up and down completely randomly.

Pair Corralation between Federated Prudent and Abr 75/25

Assuming the 90 days horizon Federated Prudent Bear is expected to generate 0.99 times more return on investment than Abr 75/25. However, Federated Prudent Bear is 1.01 times less risky than Abr 75/25. It trades about 0.11 of its potential returns per unit of risk. Abr 7525 Volatility is currently generating about -0.11 per unit of risk. If you would invest  379.00  in Federated Prudent Bear on December 29, 2024 and sell it today you would earn a total of  24.00  from holding Federated Prudent Bear or generate 6.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Federated Prudent Bear  vs.  Abr 7525 Volatility

Federated Prudent Bear

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Prudent Bear are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Federated Prudent may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Abr 7525 Volatility

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abr 7525 Volatility has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Federated Prudent and Abr 75/25

The main advantage of trading using opposite Federated Prudent and Abr 75/25 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Prudent position performs unexpectedly, Abr 75/25 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 Abr 75/25 will offset losses from the drop in Abr 75/25's long position.

The idea behind Federated Prudent Bear and Abr 7525 Volatility 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.