Correlation Between Transamerica Emerging and Federated Short-intermedia
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and Federated Short-intermedia 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 Transamerica Emerging and Federated Short-intermedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Emerging Markets and Federated Short Intermediate Duration, you can compare the effects of market volatilities on Transamerica Emerging and Federated Short-intermedia 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 Transamerica Emerging with a short position of Federated Short-intermedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Federated Short-intermedia.
Diversification Opportunities for Transamerica Emerging and Federated Short-intermedia
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and FEDERATED is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Federated Short Intermediate D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short-intermedia and Transamerica Emerging 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 Transamerica Emerging Markets are associated (or correlated) with Federated Short-intermedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short-intermedia has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Federated Short-intermedia go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Federated Short-intermedia
Assuming the 90 days horizon Transamerica Emerging Markets is expected to generate 7.71 times more return on investment than Federated Short-intermedia. However, Transamerica Emerging is 7.71 times more volatile than Federated Short Intermediate Duration. It trades about 0.04 of its potential returns per unit of risk. Federated Short Intermediate Duration is currently generating about 0.16 per unit of risk. If you would invest 727.00 in Transamerica Emerging Markets on August 29, 2024 and sell it today you would earn a total of 74.00 from holding Transamerica Emerging Markets or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Federated Short Intermediate D
Performance |
| Timeline |
| Transamerica Emerging |
| Federated Short-intermedia |
Transamerica Emerging and Federated Short-intermedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Federated Short-intermedia
The main advantage of trading using opposite Transamerica Emerging and Federated Short-intermedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, Federated Short-intermedia 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 Federated Short-intermedia will offset losses from the drop in Federated Short-intermedia's long position.| Transamerica Emerging vs. Vanguard Emerging Markets | Transamerica Emerging vs. Vanguard Emerging Markets | Transamerica Emerging vs. HUMANA INC | Transamerica Emerging vs. Aquagold International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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