Correlation Between Transamerica Intermediate and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate and Fidelity Series 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 Intermediate and Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Intermediate Muni and Fidelity Series Growth, you can compare the effects of market volatilities on Transamerica Intermediate and Fidelity Series 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 Intermediate with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Fidelity Series.
Diversification Opportunities for Transamerica Intermediate and Fidelity Series
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transamerica and Fidelity is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Fidelity Series Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Growth and Transamerica Intermediate 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 Intermediate Muni are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Growth has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Fidelity Series go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Fidelity Series
Assuming the 90 days horizon Transamerica Intermediate is expected to generate 9.4 times less return on investment than Fidelity Series. But when comparing it to its historical volatility, Transamerica Intermediate Muni is 2.92 times less risky than Fidelity Series. It trades about 0.07 of its potential returns per unit of risk. Fidelity Series Growth is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,195 in Fidelity Series Growth on September 2, 2024 and sell it today you would earn a total of 241.00 from holding Fidelity Series Growth or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. Fidelity Series Growth
Performance |
| Timeline |
| Transamerica Intermediate |
| Fidelity Series Growth |
Transamerica Intermediate and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Fidelity Series
The main advantage of trading using opposite Transamerica Intermediate and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate position performs unexpectedly, Fidelity Series 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 Fidelity Series will offset losses from the drop in Fidelity Series' long position.The idea behind Transamerica Intermediate Muni and Fidelity Series Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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