Correlation Between Federated Kaufmann and Transamerica Intermediate
Can any of the company-specific risk be diversified away by investing in both Federated Kaufmann and Transamerica Intermediate 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 Kaufmann and Transamerica Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Kaufmann Small and Transamerica Intermediate Muni, you can compare the effects of market volatilities on Federated Kaufmann and Transamerica Intermediate 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 Kaufmann with a short position of Transamerica Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Kaufmann and Transamerica Intermediate.
Diversification Opportunities for Federated Kaufmann and Transamerica Intermediate
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and Transamerica is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Small and Transamerica Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intermediate and Federated Kaufmann 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 Kaufmann Small are associated (or correlated) with Transamerica Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intermediate has no effect on the direction of Federated Kaufmann i.e., Federated Kaufmann and Transamerica Intermediate go up and down completely randomly.
Pair Corralation between Federated Kaufmann and Transamerica Intermediate
Assuming the 90 days horizon Federated Kaufmann Small is expected to generate 4.76 times more return on investment than Transamerica Intermediate. However, Federated Kaufmann is 4.76 times more volatile than Transamerica Intermediate Muni. It trades about 0.05 of its potential returns per unit of risk. Transamerica Intermediate Muni is currently generating about 0.07 per unit of risk. If you would invest 4,165 in Federated Kaufmann Small on September 3, 2024 and sell it today you would earn a total of 1,244 from holding Federated Kaufmann Small or generate 29.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Kaufmann Small vs. Transamerica Intermediate Muni
Performance |
| Timeline |
| Federated Kaufmann Small |
| Transamerica Intermediate |
Federated Kaufmann and Transamerica Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Kaufmann and Transamerica Intermediate
The main advantage of trading using opposite Federated Kaufmann and Transamerica Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Kaufmann position performs unexpectedly, Transamerica Intermediate 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 Intermediate will offset losses from the drop in Transamerica Intermediate's long position.| Federated Kaufmann vs. The Hartford Midcap | Federated Kaufmann vs. Mfs Emerging Markets | Federated Kaufmann vs. Wells Fargo Special | Federated Kaufmann vs. Washington Mutual Investors |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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