Correlation Between Alphabet and Federated Kaufmann

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

By analyzing existing cross correlation between Alphabet Inc Class C and Federated Kaufmann Large, you can compare the effects of market volatilities on Alphabet and Federated Kaufmann 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 Alphabet with a short position of Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Federated Kaufmann.

Diversification Opportunities for Alphabet and Federated Kaufmann

-0.72

Correlation Coefficient

Alphabet  Federated Kaufmann

Pay attention - limited upside

The 3 months correlation between Alphabet and Federated is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Federated Kaufmann Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Large and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann Large has no effect on the direction of Alphabet i.e., Alphabet and Federated Kaufmann go up and down completely randomly.

Pair Corralation between Alphabet and Federated Kaufmann

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.52 times more return on investment than Federated Kaufmann. However, Alphabet Inc Class C is 1.92 times less risky than Federated Kaufmann. It trades about 0.14 of its potential returns per unit of risk. Federated Kaufmann Large is currently generating about -0.08 per unit of risk. If you would invest  16,700  in Alphabet Inc Class C on September 28, 2024 and sell it today you would earn a total of  2,712  from holding Alphabet Inc Class C or generate 16.24% return on investment over 90 days.

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

Alphabet Inc Class C  vs.  Federated Kaufmann Large

Alphabet Class C

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Federated Kaufmann Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Kaufmann Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Alphabet and Federated Kaufmann

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

The idea behind Alphabet Inc Class C and Federated Kaufmann Large 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..