Correlation Between Transamerica Intermediate and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate and Federated Kaufmann 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 Federated Kaufmann 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 Federated Kaufmann Small, you can compare the effects of market volatilities on Transamerica Intermediate and Federated Kaufmann 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 Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Federated Kaufmann.
Diversification Opportunities for Transamerica Intermediate and Federated Kaufmann
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transamerica and Federated is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Federated Kaufmann Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Small 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 Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann Small has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Federated Kaufmann go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Federated Kaufmann
Assuming the 90 days horizon Transamerica Intermediate is expected to generate 3.43 times less return on investment than Federated Kaufmann. But when comparing it to its historical volatility, Transamerica Intermediate Muni is 4.76 times less risky than Federated Kaufmann. It trades about 0.07 of its potential returns per unit of risk. Federated Kaufmann Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,165 in Federated Kaufmann Small on September 3, 2024 and sell it today you would earn a total of 1,244 from holding Federated Kaufmann Small or generate 29.87% 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. Federated Kaufmann Small
Performance |
| Timeline |
| Transamerica Intermediate |
| Federated Kaufmann Small |
Transamerica Intermediate and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Federated Kaufmann
The main advantage of trading using opposite Transamerica Intermediate and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate position performs unexpectedly, Federated Kaufmann 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 Kaufmann will offset losses from the drop in Federated Kaufmann's long position.| Transamerica Intermediate vs. Us Real Estate | Transamerica Intermediate vs. Jhancock Real Estate | Transamerica Intermediate vs. Amg Managers Centersquare | Transamerica Intermediate vs. Columbia Real Estate |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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