Correlation Between Federated Strategic and Federated Fund

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

Diversification Opportunities for Federated Strategic and Federated Fund

0.7

Correlation Coefficient

Federated Strategic  Federated Fund

Poor diversification

The 3 months correlation between Federated and Federated is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Income and Federated Fund For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Fund For 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 Federated Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Fund For has no effect on the direction of Federated Strategic i.e., Federated Strategic and Federated Fund go up and down completely randomly.

Pair Corralation between Federated Strategic and Federated Fund

Assuming the 90 days horizon Federated Strategic Income is expected to generate 0.67 times more return on investment than Federated Fund. However, Federated Strategic Income is 1.5 times less risky than Federated Fund. It trades about 0.1 of its potential returns per unit of risk. Federated Fund For is currently generating about 0.03 per unit of risk. If you would invest  815.00  in Federated Strategic Income on November 20, 2024 and sell it today you would earn a total of  11.00  from holding Federated Strategic Income or generate 1.35% return on investment over 90 days.

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

Federated Strategic Income  vs.  Federated Fund For

Federated Strategic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Strategic Income are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Federated Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Fund For

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Fund For are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Federated Fund 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 Strategic and Federated Fund

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

The idea behind Federated Strategic Income and Federated Fund For 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.