Correlation Between Federated Strategic and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both Federated Strategic and Federated Kaufmann 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 Kaufmann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Strategic Value and Federated Kaufmann Fund, you can compare the effects of market volatilities on Federated Strategic and Federated Kaufmann 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 Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Federated Kaufmann.
Diversification Opportunities for Federated Strategic and Federated Kaufmann
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Federated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Value and Federated Kaufmann Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann 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 Value are associated (or correlated) with Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann has no effect on the direction of Federated Strategic i.e., Federated Strategic and Federated Kaufmann go up and down completely randomly.
Pair Corralation between Federated Strategic and Federated Kaufmann
If you would invest (100.00) in Federated Strategic Value on September 26, 2024 and sell it today you would earn a total of 100.00 from holding Federated Strategic Value or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 0.0% |
Values | Daily Returns |
Federated Strategic Value vs. Federated Kaufmann Fund
Performance |
Timeline |
Federated Strategic Value |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Federated Kaufmann |
Federated Strategic and Federated Kaufmann Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Strategic and Federated Kaufmann
The main advantage of trading using opposite Federated Strategic and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic position performs unexpectedly, Federated Kaufmann 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 Kaufmann will offset losses from the drop in Federated Kaufmann's long position.Federated Strategic vs. World Energy Fund | Federated Strategic vs. Oil Gas Ultrasector | Federated Strategic vs. Gmo Resources | Federated Strategic vs. Invesco Energy Fund |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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