Correlation Between Cornerstone Strategic and Transamerica Large
Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic and Transamerica Large 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 Cornerstone Strategic and Transamerica Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornerstone Strategic Value and Transamerica Large Cap, you can compare the effects of market volatilities on Cornerstone Strategic and Transamerica Large 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 Cornerstone Strategic with a short position of Transamerica Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and Transamerica Large.
Diversification Opportunities for Cornerstone Strategic and Transamerica Large
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cornerstone and Transamerica is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value and Transamerica Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Cap and Cornerstone Strategic 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 Cornerstone Strategic Value are associated (or correlated) with Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Cap has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Transamerica Large go up and down completely randomly.
Pair Corralation between Cornerstone Strategic and Transamerica Large
Considering the 90-day investment horizon Cornerstone Strategic Value is expected to generate 1.1 times more return on investment than Transamerica Large. However, Cornerstone Strategic is 1.1 times more volatile than Transamerica Large Cap. It trades about 0.62 of its potential returns per unit of risk. Transamerica Large Cap is currently generating about 0.19 per unit of risk. If you would invest 791.00 in Cornerstone Strategic Value on August 29, 2024 and sell it today you would earn a total of 100.00 from holding Cornerstone Strategic Value or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornerstone Strategic Value vs. Transamerica Large Cap
Performance |
| Timeline |
| Cornerstone Strategic |
| Transamerica Large Cap |
Cornerstone Strategic and Transamerica Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornerstone Strategic and Transamerica Large
The main advantage of trading using opposite Cornerstone Strategic and Transamerica Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic position performs unexpectedly, Transamerica Large 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 Large will offset losses from the drop in Transamerica Large's long position.| Cornerstone Strategic vs. Gabelli Global Small | Cornerstone Strategic vs. MFS Investment Grade | Cornerstone Strategic vs. Eaton Vance National | Cornerstone Strategic vs. GAMCO Natural Resources |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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