Correlation Between Federated Mdt and Federated Mid

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

By analyzing existing cross correlation between Federated Mdt All and Federated Mid Cap Index, you can compare the effects of market volatilities on Federated Mdt and Federated Mid 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 Federated Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mdt and Federated Mid.

Diversification Opportunities for Federated Mdt and Federated Mid

0.99

Correlation Coefficient

Federated Mdt  Federated Mid

No risk reduction

The 3 months correlation between Federated and Federated is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt All and Federated Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mid Cap 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 All are associated (or correlated) with Federated Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mid Cap has no effect on the direction of Federated Mdt i.e., Federated Mdt and Federated Mid go up and down completely randomly.

Pair Corralation between Federated Mdt and Federated Mid

Assuming the 90 days horizon Federated Mdt All is expected to generate 1.01 times more return on investment than Federated Mid. However, Federated Mdt is 1.01 times more volatile than Federated Mid Cap Index. It trades about -0.04 of its potential returns per unit of risk. Federated Mid Cap Index is currently generating about -0.05 per unit of risk. If you would invest  4,725  in Federated Mdt All on February 8, 2025 and sell it today you would lose (282.00) from holding Federated Mdt All or give up 5.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Federated Mdt All  vs.  Federated Mid Cap Index

Federated Mdt All

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federated Mdt All has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Federated Mdt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federated Mid Cap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Federated Mdt and Federated Mid

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

The idea behind Federated Mdt All and Federated Mid Cap Index 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.