Correlation Between Federated Global and Swan Defined

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

By analyzing existing cross correlation between Federated Global Allocation and Swan Defined Risk, you can compare the effects of market volatilities on Federated Global and Swan Defined 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 Global with a short position of Swan Defined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Swan Defined.

Diversification Opportunities for Federated Global and Swan Defined

0.87

Correlation Coefficient

Federated Global  Swan Defined

Very poor diversification

The 3 months correlation between Federated and Swan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Swan Defined Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swan Defined Risk and Federated Global 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 Global Allocation are associated (or correlated) with Swan Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swan Defined Risk has no effect on the direction of Federated Global i.e., Federated Global and Swan Defined go up and down completely randomly.

Pair Corralation between Federated Global and Swan Defined

Assuming the 90 days horizon Federated Global Allocation is expected to generate 1.23 times more return on investment than Swan Defined. However, Federated Global is 1.23 times more volatile than Swan Defined Risk. It trades about 0.22 of its potential returns per unit of risk. Swan Defined Risk is currently generating about 0.23 per unit of risk. If you would invest  2,058  in Federated Global Allocation on May 16, 2025 and sell it today you would earn a total of  124.00  from holding Federated Global Allocation or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Federated Global Allocation  vs.  Swan Defined Risk

Federated Global All

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Global Allocation are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Federated Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Swan Defined Risk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Swan Defined Risk are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Swan Defined 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 Global and Swan Defined

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

The idea behind Federated Global Allocation and Swan Defined Risk 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.