Correlation Between TRON and Federated Bond

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

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

Diversification Opportunities for TRON and Federated Bond

-0.15

Correlation Coefficient

TRON  Federated Bond

Good diversification

The 3 months correlation between TRON and Federated is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Federated Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Bond and TRON 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 TRON are associated (or correlated) with Federated Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Bond has no effect on the direction of TRON i.e., TRON and Federated Bond go up and down completely randomly.

Pair Corralation between TRON and Federated Bond

Assuming the 90 days trading horizon TRON is expected to under-perform the Federated Bond. In addition to that, TRON is 19.78 times more volatile than Federated Bond Fund. It trades about -0.06 of its total potential returns per unit of risk. Federated Bond Fund is currently generating about -0.61 per unit of volatility. If you would invest  842.00  in Federated Bond Fund on October 10, 2024 and sell it today you would lose (22.00) from holding Federated Bond Fund or give up 2.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

TRON  vs.  Federated Bond Fund

TRON

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Federated Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TRON and Federated Bond

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

The idea behind TRON and Federated Bond Fund 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.