Correlation Between Federated Mdt and Federated Max

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

By analyzing existing cross correlation between Federated Mdt Balanced and Federated Max Cap Index, you can compare the effects of market volatilities on Federated Mdt and Federated Max 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 Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mdt and Federated Max.

Diversification Opportunities for Federated Mdt and Federated Max

0.9

Correlation Coefficient

Federated Mdt  Federated Max

Almost no diversification

The 3 months correlation between Federated and Federated is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt Balanced and Federated Max Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Max Cap 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 Balanced are associated (or correlated) with Federated Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Max Cap has no effect on the direction of Federated Mdt i.e., Federated Mdt and Federated Max go up and down completely randomly.

Pair Corralation between Federated Mdt and Federated Max

Assuming the 90 days horizon Federated Mdt Balanced is expected to under-perform the Federated Max. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Mdt Balanced is 1.27 times less risky than Federated Max. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Federated Max Cap Index is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  823.00  in Federated Max Cap Index on September 25, 2024 and sell it today you would lose (65.00) from holding Federated Max Cap Index or give up 7.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.62%
Values	Daily Returns

Federated Mdt Balanced  vs.  Federated Max Cap Index

Federated Mdt Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Federated Max Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Max Cap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Federated Max is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated Mdt and Federated Max

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

The idea behind Federated Mdt Balanced and Federated Max Cap Index 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.