Correlation Between Federated High and Prudential Short
Can any of the company-specific risk be diversified away by investing in both Federated High and Prudential Short 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 High and Prudential Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated High Income and Prudential Short Duration, you can compare the effects of market volatilities on Federated High and Prudential Short 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 High with a short position of Prudential Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Prudential Short.
Diversification Opportunities for Federated High and Prudential Short
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Federated and Prudential is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Income and Prudential Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Short Duration and Federated High 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 High Income are associated (or correlated) with Prudential Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Short Duration has no effect on the direction of Federated High i.e., Federated High and Prudential Short go up and down completely randomly.
Pair Corralation between Federated High and Prudential Short
Assuming the 90 days horizon Federated High Income is expected to generate 1.04 times more return on investment than Prudential Short. However, Federated High is 1.04 times more volatile than Prudential Short Duration. It trades about 0.15 of its potential returns per unit of risk. Prudential Short Duration is currently generating about 0.15 per unit of risk. If you would invest 581.00 in Federated High Income on May 2, 2025 and sell it today you would earn a total of 107.00 from holding Federated High Income or generate 18.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated High Income vs. Prudential Short Duration
Performance |
| Timeline |
| Federated High Income |
| Prudential Short Duration |
Federated High and Prudential Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Prudential Short
The main advantage of trading using opposite Federated High and Prudential Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Prudential Short 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 Prudential Short will offset losses from the drop in Prudential Short's long position.| Federated High vs. Federated Emerging Market | Federated High vs. Federated Mdt All | Federated High vs. Federated Mdt Balanced | Federated High vs. Federated Global Allocation |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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