Correlation Between Growth Fund and Transamerica
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Transamerica 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 Growth Fund and Transamerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Transamerica Growth R6, you can compare the effects of market volatilities on Growth Fund and Transamerica 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 Growth Fund with a short position of Transamerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Transamerica.
Diversification Opportunities for Growth Fund and Transamerica
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Growth and Transamerica is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Transamerica Growth R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Growth and Growth Fund 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 Growth Fund Of are associated (or correlated) with Transamerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Growth has no effect on the direction of Growth Fund i.e., Growth Fund and Transamerica go up and down completely randomly.
Pair Corralation between Growth Fund and Transamerica
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.83 times more return on investment than Transamerica. However, Growth Fund Of is 1.21 times less risky than Transamerica. It trades about -0.08 of its potential returns per unit of risk. Transamerica Growth R6 is currently generating about -0.06 per unit of risk. If you would invest 7,580 in Growth Fund Of on November 27, 2024 and sell it today you would lose (103.00) from holding Growth Fund Of or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Transamerica Growth R6
Performance |
| Timeline |
| Growth Fund |
| Transamerica Growth |
Growth Fund and Transamerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Transamerica
The main advantage of trading using opposite Growth Fund and Transamerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Transamerica 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 will offset losses from the drop in Transamerica's long position.| Growth Fund vs. Real Estate Ultrasector | Growth Fund vs. Voya Real Estate | Growth Fund vs. Texton Property | Growth Fund vs. Baron Real Estate |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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