Correlation Between Firsthand Technology and Transamerica Financial
Can any of the company-specific risk be diversified away by investing in both Firsthand Technology and Transamerica Financial 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 Firsthand Technology and Transamerica Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firsthand Technology Opportunities and Transamerica Financial Life, you can compare the effects of market volatilities on Firsthand Technology and Transamerica Financial 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 Firsthand Technology with a short position of Transamerica Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Technology and Transamerica Financial.
Diversification Opportunities for Firsthand Technology and Transamerica Financial
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Firsthand and Transamerica is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Technology Opportuni and Transamerica Financial Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Financial and Firsthand Technology 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 Firsthand Technology Opportunities are associated (or correlated) with Transamerica Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Financial has no effect on the direction of Firsthand Technology i.e., Firsthand Technology and Transamerica Financial go up and down completely randomly.
Pair Corralation between Firsthand Technology and Transamerica Financial
Assuming the 90 days horizon Firsthand Technology is expected to generate 1.1 times less return on investment than Transamerica Financial. In addition to that, Firsthand Technology is 2.4 times more volatile than Transamerica Financial Life. It trades about 0.12 of its total potential returns per unit of risk. Transamerica Financial Life is currently generating about 0.31 per unit of volatility. If you would invest 1,062 in Transamerica Financial Life on November 5, 2024 and sell it today you would earn a total of 44.00 from holding Transamerica Financial Life or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firsthand Technology Opportuni vs. Transamerica Financial Life
Performance |
| Timeline |
| Firsthand Technology |
| Transamerica Financial |
Firsthand Technology and Transamerica Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Technology and Transamerica Financial
The main advantage of trading using opposite Firsthand Technology and Transamerica Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Technology position performs unexpectedly, Transamerica Financial 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 Financial will offset losses from the drop in Transamerica Financial's long position.| Firsthand Technology vs. Berkshire Focus | Firsthand Technology vs. Red Oak Technology | Firsthand Technology vs. Jacob Internet Fund | Firsthand Technology vs. Kinetics Internet 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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