Correlation Between Federated Floating and Federated Short
Can any of the company-specific risk be diversified away by investing in both Federated Floating and Federated Short 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 Floating and Federated Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Floating Rate and Federated Short Intermediate Duration, you can compare the effects of market volatilities on Federated Floating and Federated Short 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 Floating with a short position of Federated Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Floating and Federated Short.
Diversification Opportunities for Federated Floating and Federated Short
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Federated is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Federated Floating Rate and Federated Short Intermediate D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Inte and Federated Floating 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 Floating Rate are associated (or correlated) with Federated Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short Inte has no effect on the direction of Federated Floating i.e., Federated Floating and Federated Short go up and down completely randomly.
Pair Corralation between Federated Floating and Federated Short
Assuming the 90 days horizon Federated Floating Rate is expected to generate 1.47 times more return on investment than Federated Short. However, Federated Floating is 1.47 times more volatile than Federated Short Intermediate Duration. It trades about 0.34 of its potential returns per unit of risk. Federated Short Intermediate Duration is currently generating about 0.41 per unit of risk. If you would invest 838.00 in Federated Floating Rate on April 18, 2025 and sell it today you would earn a total of 22.00 from holding Federated Floating Rate or generate 2.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Federated Floating Rate vs. Federated Short Intermediate D
Performance |
Timeline |
Federated Floating Rate |
Federated Short Inte |
Federated Floating and Federated Short Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Floating and Federated Short
The main advantage of trading using opposite Federated Floating and Federated Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Floating position performs unexpectedly, Federated Short 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 Federated Short will offset losses from the drop in Federated Short's long position.Federated Floating vs. Federated Hermes Mdt | Federated Floating vs. Federated Mdt Large | Federated Floating vs. Federated High Income | Federated Floating vs. Federated Hermes Intermediate |
Federated Short vs. Federated Intermediate Municipal | Federated Short vs. Federated Ultrashort Bond | Federated Short vs. Federated Gov Sec | Federated Short vs. Federated Government Income |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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