Correlation Between Global Bond and Transamerica Financial
Can any of the company-specific risk be diversified away by investing in both Global Bond and Transamerica Financial 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 Global Bond and Transamerica Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Bond Fund and Transamerica Financial Life, you can compare the effects of market volatilities on Global Bond and Transamerica Financial 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 Global Bond with a short position of Transamerica Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Bond and Transamerica Financial.
Diversification Opportunities for Global Bond and Transamerica Financial
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Transamerica is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Global Bond Fund and Transamerica Financial Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Financial and Global Bond 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 Global Bond Fund are associated (or correlated) with Transamerica Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Financial has no effect on the direction of Global Bond i.e., Global Bond and Transamerica Financial go up and down completely randomly.
Pair Corralation between Global Bond and Transamerica Financial
Assuming the 90 days horizon Global Bond is expected to generate 26.18 times less return on investment than Transamerica Financial. But when comparing it to its historical volatility, Global Bond Fund is 2.52 times less risky than Transamerica Financial. It trades about 0.04 of its potential returns per unit of risk. Transamerica Financial Life is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,172 in Transamerica Financial Life on September 1, 2024 and sell it today you would earn a total of 75.00 from holding Transamerica Financial Life or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Bond Fund vs. Transamerica Financial Life
Performance |
| Timeline |
| Global Bond Fund |
| Transamerica Financial |
Global Bond and Transamerica Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Bond and Transamerica Financial
The main advantage of trading using opposite Global Bond and Transamerica Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Bond position performs unexpectedly, Transamerica Financial 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 Financial will offset losses from the drop in Transamerica Financial's long position.| Global Bond vs. Transamerica Financial Life | Global Bond vs. Mesirow Financial Small | Global Bond vs. Davis Financial Fund | Global Bond vs. Gabelli Global Financial |
| Transamerica Financial vs. Blue Current Global | Transamerica Financial vs. Commonwealth Global Fund | Transamerica Financial vs. Rbc Global Opportunities | Transamerica Financial vs. Us Global Investors |
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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