Correlation Between American Funds and Transamerica Asset
Can any of the company-specific risk be diversified away by investing in both American Funds and Transamerica Asset 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 Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Inflation and Transamerica Asset Allocation, you can compare the effects of market volatilities on American Funds and Transamerica Asset 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 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Transamerica Asset.
Diversification Opportunities for American Funds and Transamerica Asset
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Transamerica is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset 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 Inflation are associated (or correlated) with Transamerica Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Asset has no effect on the direction of American Funds i.e., American Funds and Transamerica Asset go up and down completely randomly.
Pair Corralation between American Funds and Transamerica Asset
Assuming the 90 days horizon American Funds is expected to generate 1.14 times less return on investment than Transamerica Asset. But when comparing it to its historical volatility, American Funds Inflation is 1.74 times less risky than Transamerica Asset. It trades about 0.26 of its potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,238 in Transamerica Asset Allocation on September 14, 2024 and sell it today you would earn a total of 15.00 from holding Transamerica Asset Allocation or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Inflation vs. Transamerica Asset Allocation
Performance |
| Timeline |
| American Funds Inflation |
| Transamerica Asset |
American Funds and Transamerica Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Transamerica Asset
The main advantage of trading using opposite American Funds and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Transamerica Asset 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 Asset will offset losses from the drop in Transamerica Asset's long position.| American Funds vs. Putnam Convertible Incm Gwth | American Funds vs. Virtus Convertible | American Funds vs. Advent Claymore Convertible | American Funds vs. Rationalpier 88 Convertible |
| Transamerica Asset vs. Hennessy Technology Fund | Transamerica Asset vs. Red Oak Technology | Transamerica Asset vs. Fidelity Advisor Technology | Transamerica Asset vs. Columbia Global Technology |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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