Correlation Between Transamerica Asset and Transamerica Growth
Can any of the company-specific risk be diversified away by investing in both Transamerica Asset 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 Transamerica Asset and Transamerica Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Asset Allocation and Transamerica Growth T, you can compare the effects of market volatilities on Transamerica Asset 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 Transamerica Asset with a short position of Transamerica Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and Transamerica Growth.
Diversification Opportunities for Transamerica Asset and Transamerica Growth
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Transamerica and Transamerica is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and Transamerica Growth T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Growth and Transamerica Asset 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 Transamerica Asset Allocation 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 Transamerica Asset i.e., Transamerica Asset and Transamerica Growth go up and down completely randomly.
Pair Corralation between Transamerica Asset and Transamerica Growth
Assuming the 90 days horizon Transamerica Asset is expected to generate 1.52 times less return on investment than Transamerica Growth. But when comparing it to its historical volatility, Transamerica Asset Allocation is 1.37 times less risky than Transamerica Growth. It trades about 0.09 of its potential returns per unit of risk. Transamerica Growth T is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,412 in Transamerica Growth T on August 28, 2024 and sell it today you would earn a total of 5,205 from holding Transamerica Growth T or generate 70.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Asset Allocation vs. Transamerica Growth T
Performance |
| Timeline |
| Transamerica Asset |
| Transamerica Growth |
Transamerica Asset and Transamerica Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Asset and Transamerica Growth
The main advantage of trading using opposite Transamerica Asset and Transamerica Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Asset 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.| Transamerica Asset vs. Artisan High Income | Transamerica Asset vs. Ppm High Yield | Transamerica Asset vs. Pimco High Yield | Transamerica Asset vs. Pioneer High Yield |
| Transamerica Growth vs. Balanced Fund Investor | Transamerica Growth vs. Center St Mlp | Transamerica Growth vs. Eic Value Fund | Transamerica Growth vs. Rbb Fund |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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