Correlation Between Federated Porate and Federated Government
Can any of the company-specific risk be diversified away by investing in both Federated Porate and Federated Government 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 Porate and Federated Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Porate Bond and Federated Government Income, you can compare the effects of market volatilities on Federated Porate and Federated Government 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 Porate with a short position of Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Porate and Federated Government.
Diversification Opportunities for Federated Porate and Federated Government
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Federated is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Federated Porate Bond and Federated Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government and Federated Porate 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 Porate Bond are associated (or correlated) with Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Federated Porate i.e., Federated Porate and Federated Government go up and down completely randomly.
Pair Corralation between Federated Porate and Federated Government
Assuming the 90 days horizon Federated Porate Bond is expected to generate 0.87 times more return on investment than Federated Government. However, Federated Porate Bond is 1.15 times less risky than Federated Government. It trades about -0.09 of its potential returns per unit of risk. Federated Government Income is currently generating about -0.21 per unit of risk. If you would invest 1,016 in Federated Porate Bond on April 29, 2025 and sell it today you would lose (4.00) from holding Federated Porate Bond or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Porate Bond vs. Federated Government Income
Performance |
| Timeline |
| Federated Porate Bond |
| Federated Government |
Federated Porate and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Porate and Federated Government
The main advantage of trading using opposite Federated Porate and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Porate position performs unexpectedly, Federated Government 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 Government will offset losses from the drop in Federated Government's long position.| Federated Porate vs. Great West Goldman Sachs | Federated Porate vs. Goldman Sachs Clean | Federated Porate vs. Gold And Precious | Federated Porate vs. Gamco Global Gold |
| Federated Government vs. Principal Fds Money | Federated Government vs. Hsbc Treasury Money | Federated Government vs. Blackrock Exchange Portfolio | Federated Government vs. Prudential Government Money |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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