Correlation Between Investec Emerging and Federated Municipal

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

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

Diversification Opportunities for Investec Emerging and Federated Municipal

0.85

Correlation Coefficient

Investec Emerging  Federated Municipal

Very poor diversification

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

Pair Corralation between Investec Emerging and Federated Municipal

Assuming the 90 days horizon Investec Emerging Markets is expected to under-perform the Federated Municipal. In addition to that, Investec Emerging is 6.86 times more volatile than Federated Municipal High. It trades about -0.06 of its total potential returns per unit of risk. Federated Municipal High is currently generating about 0.0 per unit of volatility. If you would invest  803.00  in Federated Municipal High on September 5, 2025 and sell it today you would earn a total of  0.00  from holding Federated Municipal High or generate 0.0% return on investment over 90 days.

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

Investec Emerging Markets  vs.  Federated Municipal High

Investec Emerging Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Emerging Markets are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Investec Emerging may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Federated Municipal High

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Municipal High are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Federated Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Investec Emerging and Federated Municipal

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

The idea behind Investec Emerging Markets and Federated Municipal High 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.