Correlation Between American Balanced and Transamerica Asset
Can any of the company-specific risk be diversified away by investing in both American Balanced and Transamerica Asset 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 Asset 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 Asset Allocation, you can compare the effects of market volatilities on American Balanced and Transamerica Asset 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 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Transamerica Asset.
Diversification Opportunities for American Balanced and Transamerica Asset
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Transamerica is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset 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 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Asset has no effect on the direction of American Balanced i.e., American Balanced and Transamerica Asset go up and down completely randomly.
Pair Corralation between American Balanced and Transamerica Asset
Assuming the 90 days horizon American Balanced is expected to generate 1.56 times less return on investment than Transamerica Asset. But when comparing it to its historical volatility, American Balanced Fund is 1.02 times less risky than Transamerica Asset. It trades about 0.11 of its potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,385 in Transamerica Asset Allocation on August 31, 2024 and sell it today you would earn a total of 28.00 from holding Transamerica Asset Allocation or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced Fund vs. Transamerica Asset Allocation
Performance |
| Timeline |
| American Balanced |
| Transamerica Asset |
American Balanced and Transamerica Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Transamerica Asset
The main advantage of trading using opposite American Balanced and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Transamerica Asset 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 Asset will offset losses from the drop in Transamerica Asset'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 |
| Transamerica Asset vs. American Funds American | Transamerica Asset vs. American Funds American | Transamerica Asset vs. American Balanced | Transamerica Asset vs. American Balanced 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |