Correlation Between Scout Small and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Scout Small and Federated Mdt 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 Scout Small and Federated Mdt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scout Small Cap and Federated Mdt Small, you can compare the effects of market volatilities on Scout Small and Federated Mdt 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 Scout Small with a short position of Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scout Small and Federated Mdt.
Diversification Opportunities for Scout Small and Federated Mdt
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scout and Federated is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Scout Small Cap and Federated Mdt Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Small and Scout Small 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 Scout Small Cap are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Small has no effect on the direction of Scout Small i.e., Scout Small and Federated Mdt go up and down completely randomly.
Pair Corralation between Scout Small and Federated Mdt
Assuming the 90 days horizon Scout Small is expected to generate 1.16 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Scout Small Cap is 1.1 times less risky than Federated Mdt. It trades about 0.21 of its potential returns per unit of risk. Federated Mdt Small is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,509 in Federated Mdt Small on May 30, 2025 and sell it today you would earn a total of 428.00 from holding Federated Mdt Small or generate 17.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scout Small Cap vs. Federated Mdt Small
Performance |
| Timeline |
| Scout Small Cap |
| Federated Mdt Small |
Scout Small and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scout Small and Federated Mdt
The main advantage of trading using opposite Scout Small and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scout Small position performs unexpectedly, Federated Mdt 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 Mdt will offset losses from the drop in Federated Mdt's long position.| Scout Small vs. Multimanager Lifestyle Moderate | Scout Small vs. Sa Worldwide Moderate | Scout Small vs. Mfs Lifetime Retirement | Scout Small vs. Franklin Lifesmart Retirement |
| Federated Mdt vs. Federated Mdt Small | Federated Mdt vs. Federated Mdt Small | Federated Mdt vs. Federated Mdt Large | Federated Mdt vs. Blackrock Mid Cap |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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