Correlation Between Federated Global and International Investors

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

By analyzing existing cross correlation between Federated Global Allocation and International Investors Gold, you can compare the effects of market volatilities on Federated Global and International Investors 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 Global with a short position of International Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and International Investors.

Diversification Opportunities for Federated Global and International Investors

0.27

Correlation Coefficient

Federated Global  International Investors

Modest diversification

The 3 months correlation between Federated and International is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and International Investors Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Investors and Federated Global 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 Global Allocation are associated (or correlated) with International Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Investors has no effect on the direction of Federated Global i.e., Federated Global and International Investors go up and down completely randomly.

Pair Corralation between Federated Global and International Investors

Assuming the 90 days horizon Federated Global is expected to generate 1.96 times less return on investment than International Investors. But when comparing it to its historical volatility, Federated Global Allocation is 3.96 times less risky than International Investors. It trades about 0.13 of its potential returns per unit of risk. International Investors Gold is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,134  in International Investors Gold on September 1, 2024 and sell it today you would earn a total of  73.00  from holding International Investors Gold or generate 6.44% return on investment over 90 days.

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

Federated Global Allocation  vs.  International Investors Gold

Federated Global All

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Global Allocation are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Federated Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

International Investors

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International Investors Gold are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, International Investors may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Federated Global and International Investors

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

The idea behind Federated Global Allocation and International Investors Gold 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.