Correlation Between Federated Total and Simt Real

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

By analyzing existing cross correlation between Federated Total Return and Simt Real Estate, you can compare the effects of market volatilities on Federated Total and Simt Real 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 Total with a short position of Simt Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Simt Real.

Diversification Opportunities for Federated Total and Simt Real

-0.05

Correlation Coefficient

Federated Total  Simt Real

Good diversification

The 3 months correlation between Federated and Simt is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return and Simt Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Real Estate and Federated Total 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 Total Return are associated (or correlated) with Simt Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Real Estate has no effect on the direction of Federated Total i.e., Federated Total and Simt Real go up and down completely randomly.

Pair Corralation between Federated Total and Simt Real

Assuming the 90 days horizon Federated Total Return is expected to under-perform the Simt Real. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Total Return is 2.69 times less risky than Simt Real. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Simt Real Estate is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,688  in Simt Real Estate on August 31, 2024 and sell it today you would earn a total of  107.00  from holding Simt Real Estate or generate 6.34% return on investment over 90 days.

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

Federated Total Return  vs.  Simt Real Estate

Federated Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Simt Real Estate

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Real Estate are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Simt Real may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Federated Total and Simt Real

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

The idea behind Federated Total Return and Simt Real Estate 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.