Correlation Between Federated Intermediate and Transamerica Short
Can any of the company-specific risk be diversified away by investing in both Federated Intermediate and Transamerica Short 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 Federated Intermediate and Transamerica Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Intermediate Porate and Transamerica Short Term Bond, you can compare the effects of market volatilities on Federated Intermediate and Transamerica Short 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 Federated Intermediate with a short position of Transamerica Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Intermediate and Transamerica Short.
Diversification Opportunities for Federated Intermediate and Transamerica Short
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Transamerica is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Federated Intermediate Porate and Transamerica Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Short Term and Federated 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 Federated Intermediate Porate are associated (or correlated) with Transamerica Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Short Term has no effect on the direction of Federated Intermediate i.e., Federated Intermediate and Transamerica Short go up and down completely randomly.
Pair Corralation between Federated Intermediate and Transamerica Short
Assuming the 90 days horizon Federated Intermediate Porate is expected to generate 1.62 times more return on investment than Transamerica Short. However, Federated Intermediate is 1.62 times more volatile than Transamerica Short Term Bond. It trades about 0.19 of its potential returns per unit of risk. Transamerica Short Term Bond is currently generating about 0.21 per unit of risk. If you would invest 848.00 in Federated Intermediate Porate on May 29, 2025 and sell it today you would earn a total of 21.00 from holding Federated Intermediate Porate or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Intermediate Porate vs. Transamerica Short Term Bond
Performance |
| Timeline |
| Federated Intermediate |
Risk-Adjusted Performance
Good
Weak | Strong |
| Transamerica Short Term |
Federated Intermediate and Transamerica Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Intermediate and Transamerica Short
The main advantage of trading using opposite Federated Intermediate and Transamerica Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Intermediate position performs unexpectedly, Transamerica Short 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 Short will offset losses from the drop in Transamerica Short's long position.| Federated Intermediate vs. Enhanced Fixed Income | Federated Intermediate vs. T Rowe Price | Federated Intermediate vs. Jhancock Global Equity | Federated Intermediate vs. Smallcap World 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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