Correlation Between Federated Mdt and Federated Municipal
Can any of the company-specific risk be diversified away by investing in both Federated Mdt 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 Federated Mdt and Federated Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Mdt All and Federated Municipal Bond, you can compare the effects of market volatilities on Federated Mdt 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 Federated Mdt with a short position of Federated Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mdt and Federated Municipal.
Diversification Opportunities for Federated Mdt and Federated Municipal
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and Federated is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt All and Federated Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Municipal Bond and Federated Mdt 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 Mdt All 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 Bond has no effect on the direction of Federated Mdt i.e., Federated Mdt and Federated Municipal go up and down completely randomly.
Pair Corralation between Federated Mdt and Federated Municipal
Assuming the 90 days horizon Federated Mdt All is expected to under-perform the Federated Municipal. In addition to that, Federated Mdt is 4.99 times more volatile than Federated Municipal Bond. It trades about -0.07 of its total potential returns per unit of risk. Federated Municipal Bond is currently generating about -0.04 per unit of volatility. If you would invest 964.00 in Federated Municipal Bond on October 6, 2024 and sell it today you would lose (5.00) from holding Federated Municipal Bond or give up 0.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 97.62% |
Values | Daily Returns |
Federated Mdt All vs. Federated Municipal Bond
Performance |
Timeline |
Federated Mdt All |
Federated Municipal Bond |
Federated Mdt and Federated Municipal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Mdt and Federated Municipal
The main advantage of trading using opposite Federated Mdt and Federated Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Mdt 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.Federated Mdt vs. Baird Strategic Municipal | Federated Mdt vs. Baird Short Term Municipal | Federated Mdt vs. Nuveen Minnesota Municipal | Federated Mdt vs. Transamerica Intermediate Muni |
Federated Municipal vs. Federated Emerging Market | Federated Municipal vs. Federated Mdt All | Federated Municipal vs. Federated Mdt Balanced | Federated Municipal vs. Federated Global Allocation |
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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