Correlation Between 360 Finance and Federated Municipal
Can any of the company-specific risk be diversified away by investing in both 360 Finance and Federated Municipal 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 360 Finance and Federated Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 360 Finance and Federated Municipal Ultrashort, you can compare the effects of market volatilities on 360 Finance and Federated Municipal 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 360 Finance with a short position of Federated Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of 360 Finance and Federated Municipal.
Diversification Opportunities for 360 Finance and Federated Municipal
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 360 and Federated is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding 360 Finance and Federated Municipal Ultrashort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Municipal and 360 Finance 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 360 Finance are associated (or correlated) with Federated Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Municipal has no effect on the direction of 360 Finance i.e., 360 Finance and Federated Municipal go up and down completely randomly.
Pair Corralation between 360 Finance and Federated Municipal
Given the investment horizon of 90 days 360 Finance is expected to generate 40.4 times more return on investment than Federated Municipal. However, 360 Finance is 40.4 times more volatile than Federated Municipal Ultrashort. It trades about 0.15 of its potential returns per unit of risk. Federated Municipal Ultrashort is currently generating about 0.19 per unit of risk. If you would invest 1,426 in 360 Finance on October 5, 2024 and sell it today you would earn a total of 2,443 from holding 360 Finance or generate 171.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
360 Finance vs. Federated Municipal Ultrashort
Performance |
Timeline |
360 Finance |
Federated Municipal |
360 Finance and Federated Municipal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with 360 Finance and Federated Municipal
The main advantage of trading using opposite 360 Finance and Federated Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 360 Finance position performs unexpectedly, Federated Municipal 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 Municipal will offset losses from the drop in Federated Municipal's long position.360 Finance vs. Asure Software | 360 Finance vs. Naked Wines plc | 360 Finance vs. Celsius Holdings | 360 Finance vs. Cadence Design Systems |
Federated Municipal vs. Ab High Income | Federated Municipal vs. Legg Mason Partners | Federated Municipal vs. Mutual Of America | Federated Municipal vs. Morningstar Aggressive Growth |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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