Correlation Between Federated Municipal and Emerald Growth
Can any of the company-specific risk be diversified away by investing in both Federated Municipal and Emerald Growth 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 Municipal and Emerald Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Municipal High and Emerald Growth Fund, you can compare the effects of market volatilities on Federated Municipal and Emerald Growth 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 Municipal with a short position of Emerald Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Municipal and Emerald Growth.
Diversification Opportunities for Federated Municipal and Emerald Growth
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEDERATED and Emerald is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Federated Municipal High and Emerald Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Growth and Federated Municipal 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 Municipal High are associated (or correlated) with Emerald Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Growth has no effect on the direction of Federated Municipal i.e., Federated Municipal and Emerald Growth go up and down completely randomly.
Pair Corralation between Federated Municipal and Emerald Growth
Assuming the 90 days horizon Federated Municipal is expected to generate 1.37 times less return on investment than Emerald Growth. But when comparing it to its historical volatility, Federated Municipal High is 8.56 times less risky than Emerald Growth. It trades about 0.4 of its potential returns per unit of risk. Emerald Growth Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,567 in Emerald Growth Fund on August 27, 2025 and sell it today you would earn a total of 94.00 from holding Emerald Growth Fund or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Municipal High vs. Emerald Growth Fund
Performance |
| Timeline |
| Federated Municipal High |
| Emerald Growth |
Federated Municipal and Emerald Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Municipal and Emerald Growth
The main advantage of trading using opposite Federated Municipal and Emerald Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Municipal position performs unexpectedly, Emerald Growth 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 Emerald Growth will offset losses from the drop in Emerald Growth's long position.| Federated Municipal vs. Deutsche Health And | Federated Municipal vs. Lord Abbett Health | Federated Municipal vs. Putnam Global Health | Federated Municipal vs. Prudential Health Sciences |
| Emerald Growth vs. Tiaa Cref Real Estate | Emerald Growth vs. Franklin Real Estate | Emerald Growth vs. Pender Real Estate | Emerald Growth vs. Global Real Estate |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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