Correlation Between Acm Dynamic and Federated Porate

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

By analyzing existing cross correlation between Acm Dynamic Opportunity and Federated Porate Bond, you can compare the effects of market volatilities on Acm Dynamic and Federated Porate 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 Acm Dynamic with a short position of Federated Porate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acm Dynamic and Federated Porate.

Diversification Opportunities for Acm Dynamic and Federated Porate

-0.59

Correlation Coefficient

Acm Dynamic  Federated Porate

Excellent diversification

The 3 months correlation between Acm and Federated is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Acm Dynamic Opportunity and Federated Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Porate Bond and Acm Dynamic 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 Acm Dynamic Opportunity are associated (or correlated) with Federated Porate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Porate Bond has no effect on the direction of Acm Dynamic i.e., Acm Dynamic and Federated Porate go up and down completely randomly.

Pair Corralation between Acm Dynamic and Federated Porate

Assuming the 90 days horizon Acm Dynamic Opportunity is expected to generate 1.73 times more return on investment than Federated Porate. However, Acm Dynamic is 1.73 times more volatile than Federated Porate Bond. It trades about 0.09 of its potential returns per unit of risk. Federated Porate Bond is currently generating about 0.07 per unit of risk. If you would invest  1,743  in Acm Dynamic Opportunity on September 12, 2024 and sell it today you would earn a total of  438.00  from holding Acm Dynamic Opportunity or generate 25.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.72%
Values	Daily Returns

Acm Dynamic Opportunity  vs.  Federated Porate Bond

Acm Dynamic Opportunity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acm Dynamic Opportunity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Acm Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Porate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Acm Dynamic and Federated Porate

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

The idea behind Acm Dynamic Opportunity and Federated Porate Bond 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.