Correlation Between Federated Mdt and Arbitrage Event

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

By analyzing existing cross correlation between Federated Mdt Large and The Arbitrage Event Driven, you can compare the effects of market volatilities on Federated Mdt and Arbitrage Event 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 Arbitrage Event. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mdt and Arbitrage Event.

Diversification Opportunities for Federated Mdt and Arbitrage Event

0.95

Correlation Coefficient

Federated Mdt  Arbitrage Event

Almost no diversification

The 3 months correlation between Federated and Arbitrage is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt Large and The Arbitrage Event Driven in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Event 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 Large are associated (or correlated) with Arbitrage Event. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Event has no effect on the direction of Federated Mdt i.e., Federated Mdt and Arbitrage Event go up and down completely randomly.

Pair Corralation between Federated Mdt and Arbitrage Event

Assuming the 90 days horizon Federated Mdt Large is expected to generate 6.25 times more return on investment than Arbitrage Event. However, Federated Mdt is 6.25 times more volatile than The Arbitrage Event Driven. It trades about 0.22 of its potential returns per unit of risk. The Arbitrage Event Driven is currently generating about 0.41 per unit of risk. If you would invest  3,126  in Federated Mdt Large on May 2, 2025 and sell it today you would earn a total of  312.00  from holding Federated Mdt Large or generate 9.98% return on investment over 90 days.

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

Federated Mdt Large  vs.  The Arbitrage Event Driven

Federated Mdt Large

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt Large are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Federated Mdt may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Arbitrage Event

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in The Arbitrage Event Driven are ranked lower than 32 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Arbitrage Event 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 Mdt and Arbitrage Event

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

The idea behind Federated Mdt Large and The Arbitrage Event Driven 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.