Correlation Between American Funds and Transamerica Growth
Can any of the company-specific risk be diversified away by investing in both American Funds and Transamerica Growth 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 Growth 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 T, you can compare the effects of market volatilities on American Funds and Transamerica Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Transamerica Growth.
Diversification Opportunities for American Funds and Transamerica Growth
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 T 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 Growth. 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 Growth go up and down completely randomly.
Pair Corralation between American Funds and Transamerica Growth
Assuming the 90 days horizon American Funds is expected to generate 1.02 times less return on investment than Transamerica Growth. In addition to that, American Funds is 1.02 times more volatile than Transamerica Growth T. It trades about 0.12 of its total potential returns per unit of risk. Transamerica Growth T is currently generating about 0.12 per unit of volatility. If you would invest 7,047 in Transamerica Growth T on September 12, 2024 and sell it today you would earn a total of 6,043 from holding Transamerica Growth T or generate 85.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds The vs. Transamerica Growth T
Performance |
| Timeline |
| American Funds |
| Transamerica Growth |
American Funds and Transamerica Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Transamerica Growth
The main advantage of trading using opposite American Funds and Transamerica Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Transamerica Growth 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 Growth will offset losses from the drop in Transamerica Growth's long position.| American Funds vs. Growth Fund Investor | American Funds vs. Select Fund Investor | American Funds vs. International Growth Fund | American Funds vs. Heritage Fund Investor |
| Transamerica Growth vs. American Funds The | Transamerica Growth vs. American Funds The | Transamerica Growth vs. Growth Fund Of | Transamerica Growth vs. Growth Fund Of |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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