Correlation Between Federated Emerging and Multisector Bond
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Multisector 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 Federated Emerging and Multisector Bond 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 Multisector Bond Sma, you can compare the effects of market volatilities on Federated Emerging and Multisector 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 Federated Emerging with a short position of Multisector Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Multisector Bond.
Diversification Opportunities for Federated Emerging and Multisector Bond
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Multisector is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma 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 Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Federated Emerging i.e., Federated Emerging and Multisector Bond go up and down completely randomly.
Pair Corralation between Federated Emerging and Multisector Bond
Assuming the 90 days horizon Federated Emerging Market is expected to generate 0.88 times more return on investment than Multisector Bond. However, Federated Emerging Market is 1.13 times less risky than Multisector Bond. It trades about 0.35 of its potential returns per unit of risk. Multisector Bond Sma is currently generating about 0.25 per unit of risk. If you would invest 830.00 in Federated Emerging Market on July 18, 2025 and sell it today you would earn a total of 44.00 from holding Federated Emerging Market or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Emerging Market vs. Multisector Bond Sma
Performance |
| Timeline |
| Federated Emerging Market |
| Multisector Bond Sma |
Federated Emerging and Multisector Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Multisector Bond
The main advantage of trading using opposite Federated Emerging and Multisector Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Multisector 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 Multisector Bond will offset losses from the drop in Multisector Bond's long position.| Federated Emerging vs. Doubleline Emerging Markets | Federated Emerging vs. Siit Emerging Markets | Federated Emerging vs. Dreyfus Global Emerging | Federated Emerging vs. Delaware Emerging Markets |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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