Correlation Between American Funds and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Transamerica Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Transamerica Emerging Markets, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Transamerica Emerging.
Diversification Opportunities for American Funds and Transamerica Emerging
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Transamerica is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging 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 New 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 American Funds i.e., American Funds and Transamerica Emerging go up and down completely randomly.
Pair Corralation between American Funds and Transamerica Emerging
Assuming the 90 days horizon American Funds New is expected to under-perform the Transamerica Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds New is 1.06 times less risky than Transamerica Emerging. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Transamerica Emerging Markets is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 822.00 in Transamerica Emerging Markets on September 12, 2024 and sell it today you would earn a total of 8.00 from holding Transamerica Emerging Markets or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds New vs. Transamerica Emerging Markets
Performance |
| Timeline |
| American Funds New |
| Transamerica Emerging |
American Funds and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Transamerica Emerging
The main advantage of trading using opposite American Funds and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Elfun Government Money | American Funds vs. Edward Jones Money | American Funds vs. Aig Government Money | American Funds vs. Franklin Government Money |
| Transamerica Emerging vs. American Funds New | Transamerica Emerging vs. SCOR PK | Transamerica Emerging vs. Morningstar Unconstrained Allocation | Transamerica Emerging vs. Via Renewables |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |