Correlation Between Counterpoint Tactical and Federated Strategic

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

By analyzing existing cross correlation between Counterpoint Tactical Municipal and Federated Strategic Value, you can compare the effects of market volatilities on Counterpoint Tactical and Federated Strategic 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 Counterpoint Tactical with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Counterpoint Tactical and Federated Strategic.

Diversification Opportunities for Counterpoint Tactical and Federated Strategic

0.02

Correlation Coefficient

Counterpoint Tactical  Federated Strategic

Significant diversification

The 3 months correlation between Counterpoint and Federated is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Counterpoint Tactical Municipa and Federated Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic Value and Counterpoint Tactical 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 Counterpoint Tactical Municipal are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic Value has no effect on the direction of Counterpoint Tactical i.e., Counterpoint Tactical and Federated Strategic go up and down completely randomly.

Pair Corralation between Counterpoint Tactical and Federated Strategic

Assuming the 90 days horizon Counterpoint Tactical Municipal is expected to generate 0.43 times more return on investment than Federated Strategic. However, Counterpoint Tactical Municipal is 2.32 times less risky than Federated Strategic. It trades about -0.04 of its potential returns per unit of risk. Federated Strategic Value is currently generating about -0.15 per unit of risk. If you would invest  1,099  in Counterpoint Tactical Municipal on September 20, 2024 and sell it today you would lose (8.00) from holding Counterpoint Tactical Municipal or give up 0.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Counterpoint Tactical Municipa  vs.  Federated Strategic Value

Counterpoint Tactical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Federated Strategic Value

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Counterpoint Tactical and Federated Strategic

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

The idea behind Counterpoint Tactical Municipal and Federated Strategic Value 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.