Correlation Between First Investors and Transamerica Asset
Can any of the company-specific risk be diversified away by investing in both First Investors 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 First Investors and Transamerica Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Investors Select and Transamerica Asset Allocation, you can compare the effects of market volatilities on First Investors 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 First Investors with a short position of Transamerica Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Investors and Transamerica Asset.
Diversification Opportunities for First Investors and Transamerica Asset
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Transamerica is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding First Investors Select and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and First Investors 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 First Investors Select 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 First Investors i.e., First Investors and Transamerica Asset go up and down completely randomly.
Pair Corralation between First Investors and Transamerica Asset
Assuming the 90 days horizon First Investors Select is expected to generate 2.24 times more return on investment than Transamerica Asset. However, First Investors is 2.24 times more volatile than Transamerica Asset Allocation. It trades about 0.12 of its potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.15 per unit of risk. If you would invest 1,226 in First Investors Select on September 12, 2024 and sell it today you would earn a total of 101.00 from holding First Investors Select or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
First Investors Select vs. Transamerica Asset Allocation
Performance |
| Timeline |
| First Investors Select |
| Transamerica Asset |
First Investors and Transamerica Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Investors and Transamerica Asset
The main advantage of trading using opposite First Investors and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Investors 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.| First Investors vs. Multimedia Portfolio Multimedia | First Investors vs. Locorr Dynamic Equity | First Investors vs. Cutler Equity | First Investors vs. Balanced Fund Retail |
| Transamerica Asset vs. Calvert Moderate Allocation | Transamerica Asset vs. Qs Moderate Growth | Transamerica Asset vs. College Retirement Equities | Transamerica Asset vs. Sa Worldwide Moderate |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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