Correlation Between Lifestyle and Federated Bond
Can any of the company-specific risk be diversified away by investing in both Lifestyle and Federated Bond 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 Lifestyle and Federated Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Moderate and Federated Bond Fund, you can compare the effects of market volatilities on Lifestyle and Federated Bond 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 Lifestyle with a short position of Federated Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Federated Bond.
Diversification Opportunities for Lifestyle and Federated Bond
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lifestyle and Federated is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Moderate and Federated Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Bond and Lifestyle 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 Lifestyle Ii Moderate are associated (or correlated) with Federated Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Bond has no effect on the direction of Lifestyle i.e., Lifestyle and Federated Bond go up and down completely randomly.
Pair Corralation between Lifestyle and Federated Bond
Assuming the 90 days horizon Lifestyle Ii Moderate is expected to generate 1.38 times more return on investment than Federated Bond. However, Lifestyle is 1.38 times more volatile than Federated Bond Fund. It trades about 0.25 of its potential returns per unit of risk. Federated Bond Fund is currently generating about 0.26 per unit of risk. If you would invest 1,109 in Lifestyle Ii Moderate on June 8, 2025 and sell it today you would earn a total of 54.00 from holding Lifestyle Ii Moderate or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifestyle Ii Moderate vs. Federated Bond Fund
Performance |
| Timeline |
| Lifestyle Ii Moderate |
| Federated Bond |
Lifestyle and Federated Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifestyle and Federated Bond
The main advantage of trading using opposite Lifestyle and Federated Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle position performs unexpectedly, Federated Bond 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 Bond will offset losses from the drop in Federated Bond's long position.| Lifestyle vs. Blackrock Conservative Prprdptfinstttnl | Lifestyle vs. Global Diversified Income | Lifestyle vs. Calvert Conservative Allocation | Lifestyle vs. Aqr Diversified Arbitrage |
| Federated Bond vs. Lifestyle Ii Moderate | Federated Bond vs. Tiaa Cref Lifestyle Moderate | Federated Bond vs. Blackrock Moderate Prepared | Federated Bond vs. Jpmorgan Smartretirement 2035 |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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