Correlation Between Federated Short-term and Transamerica Asset
Can any of the company-specific risk be diversified away by investing in both Federated Short-term and Transamerica Asset 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 Short-term and Transamerica Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Short Term Income and Transamerica Asset Allocation, you can compare the effects of market volatilities on Federated Short-term and Transamerica Asset 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 Short-term with a short position of Transamerica Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-term and Transamerica Asset.
Diversification Opportunities for Federated Short-term and Transamerica Asset
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between FEDERATED and Transamerica is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and Federated Short-term 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 Short Term Income are associated (or correlated) with Transamerica Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Asset has no effect on the direction of Federated Short-term i.e., Federated Short-term and Transamerica Asset go up and down completely randomly.
Pair Corralation between Federated Short-term and Transamerica Asset
Assuming the 90 days horizon Federated Short-term is expected to generate 31.81 times less return on investment than Transamerica Asset. But when comparing it to its historical volatility, Federated Short Term Income is 4.53 times less risky than Transamerica Asset. It trades about 0.05 of its potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,350 in Transamerica Asset Allocation on September 4, 2024 and sell it today you would earn a total of 52.00 from holding Transamerica Asset Allocation or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Short Term Income vs. Transamerica Asset Allocation
Performance |
| Timeline |
| Federated Short Term |
| Transamerica Asset |
Federated Short-term and Transamerica Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short-term and Transamerica Asset
The main advantage of trading using opposite Federated Short-term and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short-term position performs unexpectedly, Transamerica Asset 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 Asset will offset losses from the drop in Transamerica Asset's long position.| Federated Short-term vs. American Century Etf | Federated Short-term vs. Lord Abbett Small | Federated Short-term vs. Victory Rs Partners | Federated Short-term vs. Royce Opportunity Fund |
| Transamerica Asset vs. Rbc Short Duration | Transamerica Asset vs. Federated Short Term Income | Transamerica Asset vs. Goldman Sachs Short | Transamerica Asset vs. Quantitative Longshort Equity |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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