Correlation Between Federated Strategic and Federated Equity
Can any of the company-specific risk be diversified away by investing in both Federated Strategic and Federated Equity 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 Strategic and Federated Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Strategic Income and Federated Equity Income, you can compare the effects of market volatilities on Federated Strategic and Federated Equity 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 Strategic with a short position of Federated Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Federated Equity.
Diversification Opportunities for Federated Strategic and Federated Equity
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Federated is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Income and Federated Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Equity Income and Federated Strategic 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 Strategic Income are associated (or correlated) with Federated Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Equity Income has no effect on the direction of Federated Strategic i.e., Federated Strategic and Federated Equity go up and down completely randomly.
Pair Corralation between Federated Strategic and Federated Equity
Assuming the 90 days horizon Federated Strategic is expected to generate 3.53 times less return on investment than Federated Equity. But when comparing it to its historical volatility, Federated Strategic Income is 3.24 times less risky than Federated Equity. It trades about 0.26 of its potential returns per unit of risk. Federated Equity Income is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,099 in Federated Equity Income on April 23, 2025 and sell it today you would earn a total of 237.00 from holding Federated Equity Income or generate 11.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Federated Strategic Income vs. Federated Equity Income
Performance |
Timeline |
Federated Strategic |
Federated Equity Income |
Federated Strategic and Federated Equity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Strategic and Federated Equity
The main advantage of trading using opposite Federated Strategic and Federated Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic position performs unexpectedly, Federated Equity 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 Equity will offset losses from the drop in Federated Equity's long position.Federated Strategic vs. Voya Target Retirement | Federated Strategic vs. Jpmorgan Smartretirement 2035 | Federated Strategic vs. Deutsche Multi Asset Moderate | Federated Strategic vs. State Street Target |
Federated Equity vs. Siit Large Cap | Federated Equity vs. Profunds Large Cap Growth | Federated Equity vs. Upright Assets Allocation | Federated Equity vs. Growth Allocation Fund |
Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |