Correlation Between Federated Government and Us Government
Can any of the company-specific risk be diversified away by investing in both Federated Government and Us 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 Government and Us Government 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 Us Government Securities, you can compare the effects of market volatilities on Federated Government and Us 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 Government with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Us Government.
Diversification Opportunities for Federated Government and Us Government
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Federated and RGVEX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Income and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Federated Government i.e., Federated Government and Us Government go up and down completely randomly.
Pair Corralation between Federated Government and Us Government
Assuming the 90 days horizon Federated Government is expected to generate 1.03 times less return on investment than Us Government. But when comparing it to its historical volatility, Federated Government Income is 1.01 times less risky than Us Government. It trades about 0.29 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Us Government Securities on June 9, 2025 and sell it today you would earn a total of 18.00 from holding Us Government Securities or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Income vs. Us Government Securities
Performance |
| Timeline |
| Federated Government |
| Us Government Securities |
Federated Government and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Us Government
The main advantage of trading using opposite Federated Government and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Us 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 Us Government will offset losses from the drop in Us Government's long position.| Federated Government vs. Dodge Cox Emerging | Federated Government vs. Siit Emerging Markets | Federated Government vs. The Hartford Emerging | Federated Government vs. Morgan Stanley Emerging |
| Us Government vs. Sprott Gold Equity | Us Government vs. Goldman Sachs Clean | Us Government vs. Fidelity Advisor Gold | Us Government vs. First Eagle Gold |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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