Correlation Between Us Global and Federated Global

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

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

Diversification Opportunities for Us Global and Federated Global

0.76

Correlation Coefficient

Us Global  Federated Global

Poor diversification

The 3 months correlation between USGLX and FEDERATED is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Us Global Leaders and Federated Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Global All and Us 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 Us Global Leaders are associated (or correlated) with Federated Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Global All has no effect on the direction of Us Global i.e., Us Global and Federated Global go up and down completely randomly.

Pair Corralation between Us Global and Federated Global

Assuming the 90 days horizon Us Global Leaders is expected to generate 1.7 times more return on investment than Federated Global. However, Us Global is 1.7 times more volatile than Federated Global Allocation. It trades about 0.15 of its potential returns per unit of risk. Federated Global Allocation is currently generating about 0.12 per unit of risk. If you would invest  7,099  in Us Global Leaders on September 2, 2024 and sell it today you would earn a total of  517.00  from holding Us Global Leaders or generate 7.28% return on investment over 90 days.

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

Us Global Leaders  vs.  Federated Global Allocation

Us Global Leaders

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us Global Leaders are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Us Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Federated Global All

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Global Allocation are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Federated Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Us Global and Federated Global

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

The idea behind Us Global Leaders and Federated Global Allocation 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 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.