Correlation Between Federated Mdt and Vanguard Financials
Can any of the company-specific risk be diversified away by investing in both Federated Mdt and Vanguard Financials 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 Mdt and Vanguard Financials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Mdt All and Vanguard Financials Index, you can compare the effects of market volatilities on Federated Mdt and Vanguard Financials 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 Mdt with a short position of Vanguard Financials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mdt and Vanguard Financials.
Diversification Opportunities for Federated Mdt and Vanguard Financials
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt All and Vanguard Financials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Financials Index and Federated Mdt 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 Mdt All are associated (or correlated) with Vanguard Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Financials Index has no effect on the direction of Federated Mdt i.e., Federated Mdt and Vanguard Financials go up and down completely randomly.
Pair Corralation between Federated Mdt and Vanguard Financials
Assuming the 90 days horizon Federated Mdt All is expected to generate 0.87 times more return on investment than Vanguard Financials. However, Federated Mdt All is 1.14 times less risky than Vanguard Financials. It trades about 0.41 of its potential returns per unit of risk. Vanguard Financials Index is currently generating about 0.28 per unit of risk. If you would invest 4,016 in Federated Mdt All on April 20, 2025 and sell it today you would earn a total of 983.00 from holding Federated Mdt All or generate 24.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Mdt All vs. Vanguard Financials Index
Performance |
| Timeline |
| Federated Mdt All |
| Vanguard Financials Index |
Federated Mdt and Vanguard Financials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Mdt and Vanguard Financials
The main advantage of trading using opposite Federated Mdt and Vanguard Financials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Mdt position performs unexpectedly, Vanguard Financials 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 Vanguard Financials will offset losses from the drop in Vanguard Financials' long position.| Federated Mdt vs. Pace Smallmedium Value | Federated Mdt vs. Royce Special Equity | Federated Mdt vs. Fpa Queens Road | Federated Mdt vs. Boston Partners Small |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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