Correlation Between Federated Government and Guidepath(r) Conservative
Can any of the company-specific risk be diversified away by investing in both Federated Government and Guidepath(r) Conservative 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 Government and Guidepath(r) Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Government Income and Guidepath Servative Allocation, you can compare the effects of market volatilities on Federated Government and Guidepath(r) Conservative 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 Government with a short position of Guidepath(r) Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Guidepath(r) Conservative.
Diversification Opportunities for Federated Government and Guidepath(r) Conservative
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Federated and Guidepath(r) is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Income and Guidepath Servative Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath(r) Conservative and Federated Government 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 Government Income are associated (or correlated) with Guidepath(r) Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath(r) Conservative has no effect on the direction of Federated Government i.e., Federated Government and Guidepath(r) Conservative go up and down completely randomly.
Pair Corralation between Federated Government and Guidepath(r) Conservative
Assuming the 90 days horizon Federated Government is expected to generate 2.73 times less return on investment than Guidepath(r) Conservative. But when comparing it to its historical volatility, Federated Government Income is 1.02 times less risky than Guidepath(r) Conservative. It trades about 0.03 of its potential returns per unit of risk. Guidepath Servative Allocation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 985.00 in Guidepath Servative Allocation on April 10, 2025 and sell it today you would earn a total of 190.00 from holding Guidepath Servative Allocation or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Income vs. Guidepath Servative Allocation
Performance |
| Timeline |
| Federated Government |
| Guidepath(r) Conservative |
Federated Government and Guidepath(r) Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Guidepath(r) Conservative
The main advantage of trading using opposite Federated Government and Guidepath(r) Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Guidepath(r) Conservative 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 Guidepath(r) Conservative will offset losses from the drop in Guidepath(r) Conservative's long position.The idea behind Federated Government Income and Guidepath Servative Allocation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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