Correlation Between Federated Prudent and Ultrashort Emerging
Can any of the company-specific risk be diversified away by investing in both Federated Prudent and Ultrashort Emerging 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 Prudent and Ultrashort Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Prudent Bear and Ultrashort Emerging Markets, you can compare the effects of market volatilities on Federated Prudent and Ultrashort Emerging 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 Prudent with a short position of Ultrashort Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Prudent and Ultrashort Emerging.
Diversification Opportunities for Federated Prudent and Ultrashort Emerging
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Ultrashort is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Federated Prudent Bear and Ultrashort Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrashort Emerging and Federated Prudent 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 Prudent Bear are associated (or correlated) with Ultrashort Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrashort Emerging has no effect on the direction of Federated Prudent i.e., Federated Prudent and Ultrashort Emerging go up and down completely randomly.
Pair Corralation between Federated Prudent and Ultrashort Emerging
Assuming the 90 days horizon Federated Prudent Bear is expected to generate 0.41 times more return on investment than Ultrashort Emerging. However, Federated Prudent Bear is 2.43 times less risky than Ultrashort Emerging. It trades about -0.02 of its potential returns per unit of risk. Ultrashort Emerging Markets is currently generating about -0.04 per unit of risk. If you would invest 474.00 in Federated Prudent Bear on April 5, 2025 and sell it today you would lose (39.00) from holding Federated Prudent Bear or give up 8.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Prudent Bear vs. Ultrashort Emerging Markets
Performance |
| Timeline |
| Federated Prudent Bear |
| Ultrashort Emerging |
Federated Prudent and Ultrashort Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Prudent and Ultrashort Emerging
The main advantage of trading using opposite Federated Prudent and Ultrashort Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Prudent position performs unexpectedly, Ultrashort Emerging 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 Ultrashort Emerging will offset losses from the drop in Ultrashort Emerging's long position.| Federated Prudent vs. Goldman Sachs Investment | Federated Prudent vs. Ab Global Bond | Federated Prudent vs. Fidelity Money Market | Federated Prudent vs. Prudential Government Money |
| Ultrashort Emerging vs. Short Real Estate | Ultrashort Emerging vs. Short Real Estate | Ultrashort Emerging vs. Ultrashort Mid Cap Profund | Ultrashort Emerging vs. Ultrashort Mid Cap Profund |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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