Correlation Between Federated Strategic and Calvert Conservative
Can any of the company-specific risk be diversified away by investing in both Federated Strategic and Calvert Conservative 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 Strategic and Calvert Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Strategic Income and Calvert Conservative Allocation, you can compare the effects of market volatilities on Federated Strategic and Calvert Conservative 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 Strategic with a short position of Calvert Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Calvert Conservative.
Diversification Opportunities for Federated Strategic and Calvert Conservative
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Calvert is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Income and Calvert Conservative Allocatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Conservative and Federated Strategic 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 Strategic Income are associated (or correlated) with Calvert Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Conservative has no effect on the direction of Federated Strategic i.e., Federated Strategic and Calvert Conservative go up and down completely randomly.
Pair Corralation between Federated Strategic and Calvert Conservative
Assuming the 90 days horizon Federated Strategic is expected to generate 5.88 times less return on investment than Calvert Conservative. But when comparing it to its historical volatility, Federated Strategic Income is 1.3 times less risky than Calvert Conservative. It trades about 0.02 of its potential returns per unit of risk. Calvert Conservative Allocation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,814 in Calvert Conservative Allocation on September 5, 2024 and sell it today you would earn a total of 27.00 from holding Calvert Conservative Allocation or generate 1.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Federated Strategic Income vs. Calvert Conservative Allocatio
Performance |
Timeline |
Federated Strategic |
Calvert Conservative |
Federated Strategic and Calvert Conservative Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Strategic and Calvert Conservative
The main advantage of trading using opposite Federated Strategic and Calvert Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic position performs unexpectedly, Calvert Conservative 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 Calvert Conservative will offset losses from the drop in Calvert Conservative's long position.The idea behind Federated Strategic Income and Calvert Conservative Allocation 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.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |