Correlation Between Extended Market and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Extended Market and Federated Hermes 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 Extended Market and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Federated Hermes Inflation, you can compare the effects of market volatilities on Extended Market and Federated Hermes 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 Extended Market with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Federated Hermes.
Diversification Opportunities for Extended Market and Federated Hermes
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Extended and Federated is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Federated Hermes Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Inf and Extended Market 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 Extended Market Index are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Inf has no effect on the direction of Extended Market i.e., Extended Market and Federated Hermes go up and down completely randomly.
Pair Corralation between Extended Market and Federated Hermes
Assuming the 90 days horizon Extended Market is expected to generate 6.9 times less return on investment than Federated Hermes. In addition to that, Extended Market is 5.65 times more volatile than Federated Hermes Inflation. It trades about 0.0 of its total potential returns per unit of risk. Federated Hermes Inflation is currently generating about 0.02 per unit of volatility. If you would invest 967.00 in Federated Hermes Inflation on September 23, 2024 and sell it today you would earn a total of 8.00 from holding Federated Hermes Inflation or generate 0.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Extended Market Index vs. Federated Hermes Inflation
Performance |
Timeline |
Extended Market Index |
Federated Hermes Inf |
Extended Market and Federated Hermes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Extended Market and Federated Hermes
The main advantage of trading using opposite Extended Market and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.Extended Market vs. Alliancebernstein National Municipal | Extended Market vs. Counterpoint Tactical Municipal | Extended Market vs. Ab Impact Municipal | Extended Market vs. Transamerica Intermediate Muni |
Federated Hermes vs. Sp Midcap Index | Federated Hermes vs. T Rowe Price | Federated Hermes vs. Western Asset Diversified | Federated Hermes vs. Extended Market Index |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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