Correlation Between Federated Short-term and Federated Ultrashort
Can any of the company-specific risk be diversified away by investing in both Federated Short-term and Federated Ultrashort 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 Short-term and Federated Ultrashort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Short Term Income and Federated Ultrashort Bond, you can compare the effects of market volatilities on Federated Short-term and Federated Ultrashort 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 Short-term with a short position of Federated Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-term and Federated Ultrashort.
Diversification Opportunities for Federated Short-term and Federated Ultrashort
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Federated and Federated is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and Federated Ultrashort Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ultrashort Bond and Federated Short-term 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 Short Term Income are associated (or correlated) with Federated Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ultrashort Bond has no effect on the direction of Federated Short-term i.e., Federated Short-term and Federated Ultrashort go up and down completely randomly.
Pair Corralation between Federated Short-term and Federated Ultrashort
Assuming the 90 days horizon Federated Short Term Income is expected to generate 1.52 times more return on investment than Federated Ultrashort. However, Federated Short-term is 1.52 times more volatile than Federated Ultrashort Bond. It trades about 0.19 of its potential returns per unit of risk. Federated Ultrashort Bond is currently generating about 0.23 per unit of risk. If you would invest 843.00 in Federated Short Term Income on May 31, 2025 and sell it today you would earn a total of 13.00 from holding Federated Short Term Income or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Short Term Income vs. Federated Ultrashort Bond
Performance |
| Timeline |
| Federated Short Term |
| Federated Ultrashort Bond |
Federated Short-term and Federated Ultrashort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short-term and Federated Ultrashort
The main advantage of trading using opposite Federated Short-term and Federated Ultrashort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short-term position performs unexpectedly, Federated Ultrashort 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 Ultrashort will offset losses from the drop in Federated Ultrashort's long position.| Federated Short-term vs. Europac Gold Fund | Federated Short-term vs. International Investors Gold | Federated Short-term vs. Gamco Global Gold | Federated Short-term vs. Gold And Precious |
| Federated Ultrashort vs. Federated Emerging Market | Federated Ultrashort vs. Federated Mdt All | Federated Ultrashort vs. Federated Mdt Balanced | Federated Ultrashort vs. Federated Global Allocation |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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