Correlation Between Federated Institutional and Transamerica Funds
Can any of the company-specific risk be diversified away by investing in both Federated Institutional and Transamerica Funds 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 Institutional and Transamerica Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Institutional High and Transamerica Funds , you can compare the effects of market volatilities on Federated Institutional and Transamerica Funds 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 Institutional with a short position of Transamerica Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Institutional and Transamerica Funds.
Diversification Opportunities for Federated Institutional and Transamerica Funds
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FEDERATED and Transamerica is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Federated Institutional High and Transamerica Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Funds and Federated Institutional 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 Institutional High are associated (or correlated) with Transamerica Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Funds has no effect on the direction of Federated Institutional i.e., Federated Institutional and Transamerica Funds go up and down completely randomly.
Pair Corralation between Federated Institutional and Transamerica Funds
If you would invest 892.00 in Federated Institutional High on September 1, 2024 and sell it today you would earn a total of 3.00 from holding Federated Institutional High or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Institutional High vs. Transamerica Funds
Performance |
| Timeline |
| Federated Institutional |
| Transamerica Funds |
Federated Institutional and Transamerica Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Institutional and Transamerica Funds
The main advantage of trading using opposite Federated Institutional and Transamerica Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Institutional position performs unexpectedly, Transamerica Funds 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 Funds will offset losses from the drop in Transamerica Funds' long position.The idea behind Federated Institutional High and Transamerica Funds 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.
| Transamerica Funds vs. Federated Institutional High | Transamerica Funds vs. Western Asset High | Transamerica Funds vs. Pioneer High Yield | Transamerica Funds vs. Multi Manager High Yield |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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