Correlation Between Federated Hermes and Redwood Systematic

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

By analyzing existing cross correlation between Federated Hermes Conservative and Redwood Systematic Macro, you can compare the effects of market volatilities on Federated Hermes and Redwood Systematic 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 Hermes with a short position of Redwood Systematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Redwood Systematic.

Diversification Opportunities for Federated Hermes and Redwood Systematic

0.74

Correlation Coefficient

Federated Hermes  Redwood Systematic

Poor diversification

The 3 months correlation between Federated and Redwood is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Conservative and Redwood Systematic Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Systematic Macro and Federated Hermes 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 Hermes Conservative are associated (or correlated) with Redwood Systematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Systematic Macro has no effect on the direction of Federated Hermes i.e., Federated Hermes and Redwood Systematic go up and down completely randomly.

Pair Corralation between Federated Hermes and Redwood Systematic

If you would invest  1,871  in Redwood Systematic Macro on September 2, 2024 and sell it today you would earn a total of  115.00  from holding Redwood Systematic Macro or generate 6.15% return on investment over 90 days.

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

Federated Hermes Conservative  vs.  Redwood Systematic Macro

Federated Hermes Con

Risk-Adjusted Performance

13 of 100

Good

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

Redwood Systematic Macro

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Redwood Systematic Macro are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Redwood Systematic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Federated Hermes and Redwood Systematic

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

The idea behind Federated Hermes Conservative and Redwood Systematic Macro 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.