Correlation Between Fidelity New and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Fidelity New and Transamerica Emerging 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 Fidelity New and Transamerica Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity New Markets and Transamerica Emerging Markets, you can compare the effects of market volatilities on Fidelity New and Transamerica Emerging 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 Fidelity New with a short position of Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and Transamerica Emerging.
Diversification Opportunities for Fidelity New and Transamerica Emerging
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Transamerica is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Markets and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging and Fidelity New 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 Fidelity New Markets are associated (or correlated) with Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Fidelity New i.e., Fidelity New and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Fidelity New and Transamerica Emerging
Assuming the 90 days horizon Fidelity New Markets is expected to generate 1.34 times more return on investment than Transamerica Emerging. However, Fidelity New is 1.34 times more volatile than Transamerica Emerging Markets. It trades about 0.19 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about 0.17 per unit of risk. If you would invest 1,047 in Fidelity New Markets on September 4, 2024 and sell it today you would earn a total of 240.00 from holding Fidelity New Markets or generate 22.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.66% |
| Values | Daily Returns |
Fidelity New Markets vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Fidelity New Markets |
| Transamerica Emerging |
Fidelity New and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity New and Transamerica Emerging
The main advantage of trading using opposite Fidelity New and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity New position performs unexpectedly, Transamerica Emerging 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 Transamerica Emerging will offset losses from the drop in Transamerica Emerging's long position.| Fidelity New vs. Aig Government Money | Fidelity New vs. Dunham Porategovernment Bond | Fidelity New vs. Dws Government Money | Fidelity New vs. Us Government Securities |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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