Correlation Between Growth Fund and Transamerica Growth
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Growth Fund and Transamerica Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Transamerica Growth T, you can compare the effects of market volatilities on Growth Fund 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 Growth Fund with a short position of Transamerica Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Transamerica Growth.
Diversification Opportunities for Growth Fund and Transamerica Growth
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Growth and Transamerica is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Transamerica Growth T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Growth and Growth 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 Growth Fund Of 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 Growth Fund i.e., Growth Fund and Transamerica Growth go up and down completely randomly.
Pair Corralation between Growth Fund and Transamerica Growth
Assuming the 90 days horizon Growth Fund is expected to generate 1.21 times less return on investment than Transamerica Growth. But when comparing it to its historical volatility, Growth Fund Of is 1.05 times less risky than Transamerica Growth. It trades about 0.11 of its potential returns per unit of risk. Transamerica Growth T is currently generating about 0.12 of returns per unit of risk over similar time horizon. 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 |
Growth Fund Of vs. Transamerica Growth T
Performance |
| Timeline |
| Growth Fund |
| Transamerica Growth |
Growth Fund and Transamerica Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Transamerica Growth
The main advantage of trading using opposite Growth Fund and Transamerica Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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.| Growth Fund vs. American Funds The | Growth Fund vs. American Funds The | Growth Fund vs. Growth Fund Of | Growth Fund vs. Growth Fund Of |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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