Correlation Between Federated Kaufmann and First Trust
Can any of the company-specific risk be diversified away by investing in both Federated Kaufmann and First Trust 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 Kaufmann and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Kaufmann Large and First Trust Short, you can compare the effects of market volatilities on Federated Kaufmann and First Trust 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 Kaufmann with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Kaufmann and First Trust.
Diversification Opportunities for Federated Kaufmann and First Trust
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Large and First Trust Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Short and Federated Kaufmann 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 Kaufmann Large are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Short has no effect on the direction of Federated Kaufmann i.e., Federated Kaufmann and First Trust go up and down completely randomly.
Pair Corralation between Federated Kaufmann and First Trust
Assuming the 90 days horizon Federated Kaufmann Large is expected to generate 11.37 times more return on investment than First Trust. However, Federated Kaufmann is 11.37 times more volatile than First Trust Short. It trades about 0.31 of its potential returns per unit of risk. First Trust Short is currently generating about 0.46 per unit of risk. If you would invest 1,709 in Federated Kaufmann Large on April 6, 2025 and sell it today you would earn a total of 88.00 from holding Federated Kaufmann Large or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Kaufmann Large vs. First Trust Short
Performance |
| Timeline |
| Federated Kaufmann Large |
| First Trust Short |
Federated Kaufmann and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Kaufmann and First Trust
The main advantage of trading using opposite Federated Kaufmann and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Kaufmann position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Federated Kaufmann vs. Prudential Real Estate | Federated Kaufmann vs. Prudential Select Real | Federated Kaufmann vs. Commonwealth Real Estate | Federated Kaufmann vs. Global Real Estate |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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