Correlation Between Federated Emerging and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Ab Municipal 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 Emerging and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Emerging Market and Ab Municipal Bond, you can compare the effects of market volatilities on Federated Emerging and Ab Municipal 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 Emerging with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Ab Municipal.
Diversification Opportunities for Federated Emerging and Ab Municipal
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FEDERATED and AUNTX is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Ab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Bond and Federated Emerging 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 Emerging Market are associated (or correlated) with Ab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Municipal Bond has no effect on the direction of Federated Emerging i.e., Federated Emerging and Ab Municipal go up and down completely randomly.
Pair Corralation between Federated Emerging and Ab Municipal
Assuming the 90 days horizon Federated Emerging Market is expected to generate 1.94 times more return on investment than Ab Municipal. However, Federated Emerging is 1.94 times more volatile than Ab Municipal Bond. It trades about 0.29 of its potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.34 per unit of risk. If you would invest 850.00 in Federated Emerging Market on August 21, 2025 and sell it today you would earn a total of 36.00 from holding Federated Emerging Market or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Emerging Market vs. Ab Municipal Bond
Performance |
| Timeline |
| Federated Emerging Market |
| Ab Municipal Bond |
Federated Emerging and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Ab Municipal
The main advantage of trading using opposite Federated Emerging and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Ab Municipal 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 Ab Municipal will offset losses from the drop in Ab Municipal's long position.| Federated Emerging vs. Federated Mdt All | Federated Emerging vs. Federated Mdt Balanced | Federated Emerging vs. Federated Global Allocation | Federated Emerging vs. Federated Hermes Emerging |
| Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab All Market |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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