Correlation Between American Balanced and Transamerica Multi-managed
Can any of the company-specific risk be diversified away by investing in both American Balanced and Transamerica Multi-managed 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 American Balanced and Transamerica Multi-managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced Fund and Transamerica Multi Managed Balanced, you can compare the effects of market volatilities on American Balanced and Transamerica Multi-managed 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 American Balanced with a short position of Transamerica Multi-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Transamerica Multi-managed.
Diversification Opportunities for American Balanced and Transamerica Multi-managed
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Transamerica is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Transamerica Multi Managed Bal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Multi-managed and American Balanced 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 American Balanced Fund are associated (or correlated) with Transamerica Multi-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Multi-managed has no effect on the direction of American Balanced i.e., American Balanced and Transamerica Multi-managed go up and down completely randomly.
Pair Corralation between American Balanced and Transamerica Multi-managed
Assuming the 90 days horizon American Balanced is expected to generate 1.06 times less return on investment than Transamerica Multi-managed. In addition to that, American Balanced is 1.02 times more volatile than Transamerica Multi Managed Balanced. It trades about 0.12 of its total potential returns per unit of risk. Transamerica Multi Managed Balanced is currently generating about 0.13 per unit of volatility. If you would invest 2,901 in Transamerica Multi Managed Balanced on August 31, 2024 and sell it today you would earn a total of 782.00 from holding Transamerica Multi Managed Balanced or generate 26.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
American Balanced Fund vs. Transamerica Multi Managed Bal
Performance |
| Timeline |
| American Balanced |
| Transamerica Multi-managed |
American Balanced and Transamerica Multi-managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Transamerica Multi-managed
The main advantage of trading using opposite American Balanced and Transamerica Multi-managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Transamerica Multi-managed 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 Multi-managed will offset losses from the drop in Transamerica Multi-managed's long position.| American Balanced vs. Scharf Global Opportunity | American Balanced vs. Bbh Partner Fund | American Balanced vs. Materials Portfolio Fidelity | American Balanced vs. Volumetric Fund Volumetric |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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