Correlation Between Federated Kaufmann and Mercer Non-us

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

By analyzing existing cross correlation between Federated Kaufmann Large and Mercer Non US Core, you can compare the effects of market volatilities on Federated Kaufmann and Mercer Non-us 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 Kaufmann with a short position of Mercer Non-us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Kaufmann and Mercer Non-us.

Diversification Opportunities for Federated Kaufmann and Mercer Non-us

0.86

Correlation Coefficient

Federated Kaufmann  Mercer Non-us

Very poor diversification

The 3 months correlation between Federated and Mercer is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Large and Mercer Non US Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercer Non Core and Federated Kaufmann 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 Kaufmann Large are associated (or correlated) with Mercer Non-us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercer Non Core has no effect on the direction of Federated Kaufmann i.e., Federated Kaufmann and Mercer Non-us go up and down completely randomly.

Pair Corralation between Federated Kaufmann and Mercer Non-us

Assuming the 90 days horizon Federated Kaufmann Large is expected to generate 1.65 times more return on investment than Mercer Non-us. However, Federated Kaufmann is 1.65 times more volatile than Mercer Non US Core. It trades about 0.21 of its potential returns per unit of risk. Mercer Non US Core is currently generating about 0.3 per unit of risk. If you would invest  1,532  in Federated Kaufmann Large on July 6, 2025 and sell it today you would earn a total of  636.00  from holding Federated Kaufmann Large or generate 41.51% return on investment over 90 days.

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

Federated Kaufmann Large  vs.  Mercer Non US Core

Federated Kaufmann Large

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Kaufmann Large are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Federated Kaufmann may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Mercer Non Core

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mercer Non US Core are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mercer Non-us may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Federated Kaufmann and Mercer Non-us

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

The idea behind Federated Kaufmann Large and Mercer Non US Core 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.