Correlation Between Pace Smallmedium and Federated High
Can any of the company-specific risk be diversified away by investing in both Pace Smallmedium and Federated High 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 Pace Smallmedium and Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Smallmedium Value and Federated High Yield, you can compare the effects of market volatilities on Pace Smallmedium and Federated High 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 Pace Smallmedium with a short position of Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Smallmedium and Federated High.
Diversification Opportunities for Pace Smallmedium and Federated High
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pace and Federated is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value and Federated High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Yield and Pace Smallmedium 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 Pace Smallmedium Value are associated (or correlated) with Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Yield has no effect on the direction of Pace Smallmedium i.e., Pace Smallmedium and Federated High go up and down completely randomly.
Pair Corralation between Pace Smallmedium and Federated High
Assuming the 90 days horizon Pace Smallmedium Value is expected to generate 5.9 times more return on investment than Federated High. However, Pace Smallmedium is 5.9 times more volatile than Federated High Yield. It trades about 0.16 of its potential returns per unit of risk. Federated High Yield is currently generating about 0.24 per unit of risk. If you would invest 1,598 in Pace Smallmedium Value on June 5, 2025 and sell it today you would earn a total of 174.00 from holding Pace Smallmedium Value or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Smallmedium Value vs. Federated High Yield
Performance |
| Timeline |
| Pace Smallmedium Value |
| Federated High Yield |
Pace Smallmedium and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Smallmedium and Federated High
The main advantage of trading using opposite Pace Smallmedium and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Smallmedium position performs unexpectedly, Federated High 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 High will offset losses from the drop in Federated High's long position.| Pace Smallmedium vs. Pace Smallmedium Value | Pace Smallmedium vs. Pace International Equity | Pace Smallmedium vs. Ubs Allocation Fund | Pace Smallmedium vs. Ubs Allocation Fund |
| Federated High vs. Federated Emerging Market | Federated High vs. Federated Mdt All | Federated High vs. Federated Mdt Balanced | Federated High 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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