Correlation Between Emerging Economies and Federated Fund

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

By analyzing existing cross correlation between Emerging Economies Fund and Federated Fund For, you can compare the effects of market volatilities on Emerging Economies and Federated Fund 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 Emerging Economies with a short position of Federated Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Economies and Federated Fund.

Diversification Opportunities for Emerging Economies and Federated Fund

0.85

Correlation Coefficient

Emerging Economies  Federated Fund

Very poor diversification

The 3 months correlation between Emerging and Federated is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Economies Fund and Federated Fund For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Fund For and Emerging Economies 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 Emerging Economies Fund are associated (or correlated) with Federated Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Fund For has no effect on the direction of Emerging Economies i.e., Emerging Economies and Federated Fund go up and down completely randomly.

Pair Corralation between Emerging Economies and Federated Fund

Assuming the 90 days horizon Emerging Economies Fund is expected to generate 2.41 times more return on investment than Federated Fund. However, Emerging Economies is 2.41 times more volatile than Federated Fund For. It trades about 0.19 of its potential returns per unit of risk. Federated Fund For is currently generating about 0.13 per unit of risk. If you would invest  699.00  in Emerging Economies Fund on June 29, 2025 and sell it today you would earn a total of  59.00  from holding Emerging Economies Fund or generate 8.44% return on investment over 90 days.

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

Emerging Economies Fund  vs.  Federated Fund For

Emerging Economies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Economies Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Emerging Economies may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Federated Fund For

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Fund For are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Federated Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerging Economies and Federated Fund

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

The idea behind Emerging Economies Fund and Federated Fund For 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.