Correlation Between Mobile Telecommunicatio and Federated Premier

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

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

Diversification Opportunities for Mobile Telecommunicatio and Federated Premier

0.7

Correlation Coefficient

Mobile Telecommunicatio  Federated Premier

Poor diversification

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

Pair Corralation between Mobile Telecommunicatio and Federated Premier

Assuming the 90 days horizon Mobile Telecommunications Ultrasector is expected to under-perform the Federated Premier. In addition to that, Mobile Telecommunicatio is 2.72 times more volatile than Federated Premier Municipal. It trades about -0.03 of its total potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.02 per unit of volatility. If you would invest  1,077  in Federated Premier Municipal on December 30, 2024 and sell it today you would earn a total of  5.00  from holding Federated Premier Municipal or generate 0.46% return on investment over 90 days.

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

Mobile Telecommunications Ultr  vs.  Federated Premier Municipal

Mobile Telecommunicatio

Risk-Adjusted Performance

Very Weak

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

Federated Premier

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Premier Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy primary indicators, Federated Premier is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mobile Telecommunicatio and Federated Premier

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

The idea behind Mobile Telecommunications Ultrasector and Federated Premier Municipal 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.