Correlation Between Federated Max-cap and Bts Enhanced

Can any of the company-specific risk be diversified away by investing in both Federated Max-cap and Bts Enhanced 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 Max-cap and Bts Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federated Max Cap Index and Bts Enhanced Equity, you can compare the effects of market volatilities on Federated Max-cap and Bts Enhanced 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 Max-cap with a short position of Bts Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Max-cap and Bts Enhanced.

Diversification Opportunities for Federated Max-cap and Bts Enhanced

0.89

Correlation Coefficient

Federated Max-cap  Bts Enhanced

Very poor diversification

The 3 months correlation between Federated and Bts is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Federated Max Cap Index and Bts Enhanced Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bts Enhanced Equity and Federated Max-cap 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 Max Cap Index are associated (or correlated) with Bts Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bts Enhanced Equity has no effect on the direction of Federated Max-cap i.e., Federated Max-cap and Bts Enhanced go up and down completely randomly.

Pair Corralation between Federated Max-cap and Bts Enhanced

Assuming the 90 days horizon Federated Max Cap Index is expected to generate 1.13 times more return on investment than Bts Enhanced. However, Federated Max-cap is 1.13 times more volatile than Bts Enhanced Equity. It trades about 0.2 of its potential returns per unit of risk. Bts Enhanced Equity is currently generating about 0.08 per unit of risk. If you would invest  760.00  in Federated Max Cap Index on May 17, 2025 and sell it today you would earn a total of  65.00  from holding Federated Max Cap Index or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Federated Max Cap Index  vs.  Bts Enhanced Equity

Federated Max Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Max Cap Index are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Federated Max-cap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Bts Enhanced Equity

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Bts Enhanced Equity are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Bts Enhanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated Max-cap and Bts Enhanced

The main advantage of trading using opposite Federated Max-cap and Bts Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Max-cap position performs unexpectedly, Bts Enhanced 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 Bts Enhanced will offset losses from the drop in Bts Enhanced's long position.

The idea behind Federated Max Cap Index and Bts Enhanced Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.