Correlation Between Federated Strategic and Oil Gas

Can any of the company-specific risk be diversified away by investing in both Federated Strategic and Oil Gas 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 Oil Gas 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 Oil Gas Ultrasector, you can compare the effects of market volatilities on Federated Strategic and Oil Gas 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 Oil Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Oil Gas.

Diversification Opportunities for Federated Strategic and Oil Gas

-0.39

Correlation Coefficient

Federated Strategic  Oil Gas

Very good diversification

The 3 months correlation between Federated and Oil is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Income and Oil Gas Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Gas Ultrasector 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 Oil Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Gas Ultrasector has no effect on the direction of Federated Strategic i.e., Federated Strategic and Oil Gas go up and down completely randomly.

Pair Corralation between Federated Strategic and Oil Gas

Assuming the 90 days horizon Federated Strategic Income is expected to under-perform the Oil Gas. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Strategic Income is 7.66 times less risky than Oil Gas. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Oil Gas Ultrasector is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,412  in Oil Gas Ultrasector on September 13, 2024 and sell it today you would earn a total of  267.00  from holding Oil Gas Ultrasector or generate 7.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Federated Strategic Income  vs.  Oil Gas Ultrasector

Federated Strategic

Risk-Adjusted Performance

0 of 100

Weak

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

Oil Gas Ultrasector

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Gas Ultrasector are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oil Gas may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Federated Strategic and Oil Gas

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

The idea behind Federated Strategic Income and Oil Gas Ultrasector 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.