Correlation Between Transamerica Intermediate and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate and Fidelity Freedom 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 Freedom 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 Freedom Index, you can compare the effects of market volatilities on Transamerica Intermediate and Fidelity Freedom 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 Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Fidelity Freedom.
Diversification Opportunities for Transamerica Intermediate and Fidelity Freedom
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transamerica and Fidelity is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Fidelity Freedom Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Index 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 Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom Index has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Fidelity Freedom
Assuming the 90 days horizon Transamerica Intermediate is expected to generate 4.48 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Transamerica Intermediate Muni is 2.92 times less risky than Fidelity Freedom. It trades about 0.04 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,052 in Fidelity Freedom Index on October 13, 2024 and sell it today you would earn a total of 513.00 from holding Fidelity Freedom Index or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. Fidelity Freedom Index
Performance |
| Timeline |
| Transamerica Intermediate |
| Fidelity Freedom Index |
Transamerica Intermediate and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Fidelity Freedom
The main advantage of trading using opposite Transamerica Intermediate and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate position performs unexpectedly, Fidelity Freedom 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 Freedom will offset losses from the drop in Fidelity Freedom's long position.| Transamerica Intermediate vs. Calvert Moderate Allocation | Transamerica Intermediate vs. Old Westbury Large | Transamerica Intermediate vs. Enhanced Large Pany | Transamerica Intermediate vs. Siit Large Cap |
| Fidelity Freedom vs. Pace Municipal Fixed | Fidelity Freedom vs. Old Westbury Municipal | Fidelity Freedom vs. Transamerica Intermediate Muni | Fidelity Freedom vs. Georgia Tax Free Bond |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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