Correlation Between American Funds and Transamerica
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Transamerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds The and Transamerica Growth R6, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Transamerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Transamerica.
Diversification Opportunities for American Funds and Transamerica
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and Transamerica is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Transamerica Growth R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Growth and American Funds 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 Funds The 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 American Funds i.e., American Funds and Transamerica go up and down completely randomly.
Pair Corralation between American Funds and Transamerica
Assuming the 90 days horizon American Funds The is expected to generate 0.91 times more return on investment than Transamerica. However, American Funds The is 1.09 times less risky than Transamerica. It trades about 0.37 of its potential returns per unit of risk. Transamerica Growth R6 is currently generating about 0.27 per unit of risk. If you would invest 7,722 in American Funds The on September 1, 2024 and sell it today you would earn a total of 521.00 from holding American Funds The or generate 6.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds The vs. Transamerica Growth R6
Performance |
| Timeline |
| American Funds |
| Transamerica Growth |
American Funds and Transamerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Transamerica
The main advantage of trading using opposite American Funds and Transamerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Old Westbury Short Term | American Funds vs. Ab Select Longshort | American Funds vs. Vanguard Institutional Short Term | American Funds vs. Aqr Long Short Equity |
| Transamerica vs. Transamerica Emerging Markets | Transamerica vs. Transamerica Emerging Markets | Transamerica vs. Transamerica Emerging Markets | Transamerica vs. Transamerica Capital Growth |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |