Correlation Between Federated Government and Ab Conservative
Can any of the company-specific risk be diversified away by investing in both Federated Government and Ab 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 Ab 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 Ab Servative Wealth, you can compare the effects of market volatilities on Federated Government and Ab 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 Ab Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Ab Conservative.
Diversification Opportunities for Federated Government and Ab Conservative
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and APWIX is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Income and Ab Servative Wealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Servative Wealth 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 Ab Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Servative Wealth has no effect on the direction of Federated Government i.e., Federated Government and Ab Conservative go up and down completely randomly.
Pair Corralation between Federated Government and Ab Conservative
Assuming the 90 days horizon Federated Government is expected to generate 1.64 times less return on investment than Ab Conservative. But when comparing it to its historical volatility, Federated Government Income is 1.53 times less risky than Ab Conservative. It trades about 0.16 of its potential returns per unit of risk. Ab Servative Wealth is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,233 in Ab Servative Wealth on June 3, 2025 and sell it today you would earn a total of 65.00 from holding Ab Servative Wealth or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Income vs. Ab Servative Wealth
Performance |
| Timeline |
| Federated Government |
| Ab Servative Wealth |
Federated Government and Ab Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Ab Conservative
The main advantage of trading using opposite Federated Government and Ab Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Ab 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 Ab Conservative will offset losses from the drop in Ab Conservative's long position.The idea behind Federated Government Income and Ab Servative Wealth 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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