Correlation Between Energy Basic and Federated High
Can any of the company-specific risk be diversified away by investing in both Energy Basic 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 Energy Basic and Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Basic Materials and Federated High Yield, you can compare the effects of market volatilities on Energy Basic 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 Energy Basic with a short position of Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Federated High.
Diversification Opportunities for Energy Basic and Federated High
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and Federated is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials 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 Energy Basic 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 Energy Basic Materials 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 Energy Basic i.e., Energy Basic and Federated High go up and down completely randomly.
Pair Corralation between Energy Basic and Federated High
Assuming the 90 days horizon Energy Basic Materials is expected to generate 4.83 times more return on investment than Federated High. However, Energy Basic is 4.83 times more volatile than Federated High Yield. It trades about 0.13 of its potential returns per unit of risk. Federated High Yield is currently generating about 0.3 per unit of risk. If you would invest 1,257 in Energy Basic Materials on May 27, 2025 and sell it today you would earn a total of 91.00 from holding Energy Basic Materials or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Basic Materials vs. Federated High Yield
Performance |
| Timeline |
| Energy Basic Materials |
| Federated High Yield |
Energy Basic and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Basic and Federated High
The main advantage of trading using opposite Energy Basic and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Basic 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.| Energy Basic vs. Salient Alternative Beta | Energy Basic vs. Aggressive Balanced Allocation | Energy Basic vs. Salient Alternative Beta | Energy Basic vs. Moderately Aggressive Balanced |
| Federated High vs. The Short Term Municipal | Federated High vs. Multisector Bond Sma | Federated High vs. Ab Bond Inflation | Federated High vs. Leader Short Term Bond |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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