Correlation Between Federated Global and Transamerica Cleartrack
Can any of the company-specific risk be diversified away by investing in both Federated Global and Transamerica Cleartrack 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 Global and Transamerica Cleartrack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Global Allocation and Transamerica Cleartrack Retirement, you can compare the effects of market volatilities on Federated Global and Transamerica Cleartrack 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 Global with a short position of Transamerica Cleartrack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Transamerica Cleartrack.
Diversification Opportunities for Federated Global and Transamerica Cleartrack
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Transamerica is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Transamerica Cleartrack Retire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Cleartrack and Federated 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 Federated Global Allocation are associated (or correlated) with Transamerica Cleartrack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Cleartrack has no effect on the direction of Federated Global i.e., Federated Global and Transamerica Cleartrack go up and down completely randomly.
Pair Corralation between Federated Global and Transamerica Cleartrack
Assuming the 90 days horizon Federated Global Allocation is expected to generate 1.44 times more return on investment than Transamerica Cleartrack. However, Federated Global is 1.44 times more volatile than Transamerica Cleartrack Retirement. It trades about -0.01 of its potential returns per unit of risk. Transamerica Cleartrack Retirement is currently generating about -0.02 per unit of risk. If you would invest 1,998 in Federated Global Allocation on October 30, 2024 and sell it today you would lose (6.00) from holding Federated Global Allocation or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Global Allocation vs. Transamerica Cleartrack Retire
Performance |
| Timeline |
| Federated Global All |
| Transamerica Cleartrack |
Federated Global and Transamerica Cleartrack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Transamerica Cleartrack
The main advantage of trading using opposite Federated Global and Transamerica Cleartrack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global position performs unexpectedly, Transamerica Cleartrack 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 Cleartrack will offset losses from the drop in Transamerica Cleartrack's long position.| Federated Global vs. Federated Max Cap Index | Federated Global vs. Federated Kaufmann Fund | Federated Global vs. Federated Strategic Income | Federated Global vs. Federated Bond Fund |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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