Correlation Between Balanced Fund and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Transamerica Emerging 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 Balanced Fund and Transamerica Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Retail and Transamerica Emerging Markets, you can compare the effects of market volatilities on Balanced Fund and Transamerica Emerging 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 Balanced Fund with a short position of Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Transamerica Emerging.
Diversification Opportunities for Balanced Fund and Transamerica Emerging
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Balanced and Transamerica is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging and Balanced Fund 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 Balanced Fund Retail are associated (or correlated) with Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Balanced Fund i.e., Balanced Fund and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Balanced Fund and Transamerica Emerging
Assuming the 90 days horizon Balanced Fund Retail is expected to generate 0.85 times more return on investment than Transamerica Emerging. However, Balanced Fund Retail is 1.17 times less risky than Transamerica Emerging. It trades about 0.04 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about 0.01 per unit of risk. If you would invest 1,144 in Balanced Fund Retail on October 27, 2024 and sell it today you would earn a total of 143.00 from holding Balanced Fund Retail or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Retail vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Balanced Fund Retail |
| Transamerica Emerging |
Balanced Fund and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Transamerica Emerging
The main advantage of trading using opposite Balanced Fund and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Transamerica Emerging 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 Emerging will offset losses from the drop in Transamerica Emerging's long position.| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
| Transamerica Emerging vs. Gurtin California Muni | Transamerica Emerging vs. Nuveen Strategic Municipal | Transamerica Emerging vs. American High Income Municipal | Transamerica Emerging vs. T Rowe Price |
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 Stocks Directory module to find actively traded stocks across global markets.
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