Correlation Between Federated High and Prudential High
Can any of the company-specific risk be diversified away by investing in both Federated High and Prudential High 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 High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated High Yield and Prudential High Yield, you can compare the effects of market volatilities on Federated High and Prudential High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Prudential High.
Diversification Opportunities for Federated High and Prudential High
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Prudential is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and Prudential High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential High Yield 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 Yield are associated (or correlated) with Prudential High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential High Yield has no effect on the direction of Federated High i.e., Federated High and Prudential High go up and down completely randomly.
Pair Corralation between Federated High and Prudential High
Assuming the 90 days horizon Federated High Yield is expected to generate 1.2 times more return on investment than Prudential High. However, Federated High is 1.2 times more volatile than Prudential High Yield. It trades about 0.16 of its potential returns per unit of risk. Prudential High Yield is currently generating about 0.14 per unit of risk. If you would invest 621.00 in Federated High Yield on March 28, 2025 and sell it today you would earn a total of 23.00 from holding Federated High Yield or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Federated High Yield vs. Prudential High Yield
Performance |
| Timeline |
| Federated High Yield |
| Prudential High Yield |
Federated High and Prudential High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Prudential High
The main advantage of trading using opposite Federated High and Prudential High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Prudential High 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 High will offset losses from the drop in Prudential High's long position.| Federated High vs. Access Capital Munity | Federated High vs. Old Westbury Municipal | Federated High vs. Virtus Seix Government | Federated High vs. Equalize Community Development |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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