Correlation Between Federated Hermes and Federated Government
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Federated 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 Hermes and Federated Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes Ultrashort and Federated Government Ultrashort, you can compare the effects of market volatilities on Federated Hermes and Federated 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 Hermes with a short position of Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Federated Government.
Diversification Opportunities for Federated Hermes and Federated Government
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 Hermes Ultrashort and Federated Government Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government and Federated Hermes 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 Hermes Ultrashort are associated (or correlated) with Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated Government go up and down completely randomly.
Pair Corralation between Federated Hermes and Federated Government
Assuming the 90 days horizon Federated Hermes Ultrashort is expected to generate 1.18 times more return on investment than Federated Government. However, Federated Hermes is 1.18 times more volatile than Federated Government Ultrashort. It trades about 0.21 of its potential returns per unit of risk. Federated Government Ultrashort is currently generating about 0.21 per unit of risk. If you would invest 915.00 in Federated Hermes Ultrashort on April 20, 2025 and sell it today you would earn a total of 13.00 from holding Federated Hermes Ultrashort or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Ultrashort vs. Federated Government Ultrashor
Performance |
| Timeline |
| Federated Hermes Ult |
| Federated Government |
Federated Hermes and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Federated Government
The main advantage of trading using opposite Federated Hermes and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Federated 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 Federated Government will offset losses from the drop in Federated Government's long position.| Federated Hermes vs. T Rowe Price | Federated Hermes vs. Janus Global Allocation | Federated Hermes vs. T Rowe Price | Federated Hermes vs. Tiaa Cref Lifestyle Servative |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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