Correlation Between The National and Transamerica Intermediate
Can any of the company-specific risk be diversified away by investing in both The National and Transamerica Intermediate 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 The National and Transamerica Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Transamerica Intermediate Muni, you can compare the effects of market volatilities on The National and Transamerica Intermediate 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 The National with a short position of Transamerica Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of The National and Transamerica Intermediate.
Diversification Opportunities for The National and Transamerica Intermediate
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between THE and Transamerica is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Transamerica Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intermediate and The National 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 The National Tax Free are associated (or correlated) with Transamerica Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intermediate has no effect on the direction of The National i.e., The National and Transamerica Intermediate go up and down completely randomly.
Pair Corralation between The National and Transamerica Intermediate
Assuming the 90 days horizon The National is expected to generate 1.41 times less return on investment than Transamerica Intermediate. But when comparing it to its historical volatility, The National Tax Free is 1.2 times less risky than Transamerica Intermediate. It trades about 0.15 of its potential returns per unit of risk. Transamerica Intermediate Muni is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,071 in Transamerica Intermediate Muni on August 28, 2024 and sell it today you would earn a total of 13.00 from holding Transamerica Intermediate Muni or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Transamerica Intermediate Muni
Performance |
| Timeline |
| National Tax |
| Transamerica Intermediate |
The National and Transamerica Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The National and Transamerica Intermediate
The main advantage of trading using opposite The National and Transamerica Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National position performs unexpectedly, Transamerica Intermediate 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 Intermediate will offset losses from the drop in Transamerica Intermediate's long position.| The National vs. The Missouri Tax Free | The National vs. The Bond Fund | The National vs. High Yield Municipal Fund | The National vs. Fidelity Intermediate Municipal |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| CEOs Directory Screen CEOs from public companies around the world | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |