Correlation Between Transamerica Asset and Fidelity California

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

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

Diversification Opportunities for Transamerica Asset and Fidelity California

0.07

Correlation Coefficient

Transamerica Asset  Fidelity California

Significant diversification

The 3 months correlation between Transamerica and Fidelity is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and Fidelity California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity California and Transamerica Asset 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 Asset Allocation are associated (or correlated) with Fidelity California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity California has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and Fidelity California go up and down completely randomly.

Pair Corralation between Transamerica Asset and Fidelity California

Assuming the 90 days horizon Transamerica Asset Allocation is expected to under-perform the Fidelity California. In addition to that, Transamerica Asset is 4.65 times more volatile than Fidelity California Municipal. It trades about -0.1 of its total potential returns per unit of risk. Fidelity California Municipal is currently generating about -0.04 per unit of volatility. If you would invest  1,209  in Fidelity California Municipal on December 29, 2024 and sell it today you would lose (7.00) from holding Fidelity California Municipal or give up 0.58% of portfolio value over 90 days.

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

Transamerica Asset Allocation  vs.  Fidelity California Municipal

Transamerica Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transamerica Asset Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity California

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity California Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Fidelity California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Transamerica Asset and Fidelity California

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

The idea behind Transamerica Asset Allocation and Fidelity California Municipal 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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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.