Correlation Between Fidelity Series and Transamerica Large

Can any of the company-specific risk be diversified away by investing in both Fidelity Series and Transamerica Large 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 Fidelity Series and Transamerica Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Series 1000 and Transamerica Large Cap, you can compare the effects of market volatilities on Fidelity Series and Transamerica Large 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 Fidelity Series with a short position of Transamerica Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Transamerica Large.

Diversification Opportunities for Fidelity Series and Transamerica Large

0.98

Correlation Coefficient

Fidelity Series  Transamerica Large

Almost no diversification

The 3 months correlation between Fidelity and Transamerica is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and Transamerica Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Cap and Fidelity Series 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 Fidelity Series 1000 are associated (or correlated) with Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Cap has no effect on the direction of Fidelity Series i.e., Fidelity Series and Transamerica Large go up and down completely randomly.

Pair Corralation between Fidelity Series and Transamerica Large

Assuming the 90 days horizon Fidelity Series 1000 is expected to generate 1.02 times more return on investment than Transamerica Large. However, Fidelity Series is 1.02 times more volatile than Transamerica Large Cap. It trades about 0.18 of its potential returns per unit of risk. Transamerica Large Cap is currently generating about 0.17 per unit of risk. If you would invest  1,670  in Fidelity Series 1000 on August 31, 2024 and sell it today you would earn a total of  130.00  from holding Fidelity Series 1000 or generate 7.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Fidelity Series 1000  vs.  Transamerica Large Cap

Fidelity Series 1000

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series 1000 are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Series may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Transamerica Large Cap

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Large Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Transamerica Large may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Fidelity Series and Transamerica Large

The main advantage of trading using opposite Fidelity Series and Transamerica Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Series position performs unexpectedly, Transamerica Large 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 Large will offset losses from the drop in Transamerica Large's long position.

The idea behind Fidelity Series 1000 and Transamerica Large Cap 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.