Correlation Between Transamerica Financial and Global Growth
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Global 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 Financial and Global Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Financial Life and Global Growth Fund, you can compare the effects of market volatilities on Transamerica Financial and Global 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 Financial with a short position of Global Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Global Growth.
Diversification Opportunities for Transamerica Financial and Global Growth
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transamerica and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Global Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Growth and Transamerica Financial 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 Financial Life are associated (or correlated) with Global Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Growth has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Global Growth go up and down completely randomly.
Pair Corralation between Transamerica Financial and Global Growth
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 0.73 times more return on investment than Global Growth. However, Transamerica Financial Life is 1.37 times less risky than Global Growth. It trades about -0.22 of its potential returns per unit of risk. Global Growth Fund is currently generating about -0.17 per unit of risk. If you would invest 1,223 in Transamerica Financial Life on October 11, 2024 and sell it today you would lose (169.00) from holding Transamerica Financial Life or give up 13.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.56% |
| Values | Daily Returns |
Transamerica Financial Life vs. Global Growth Fund
Performance |
| Timeline |
| Transamerica Financial |
| Global Growth |
Transamerica Financial and Global Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Global Growth
The main advantage of trading using opposite Transamerica Financial and Global Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Global 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 Global Growth will offset losses from the drop in Global Growth's long position.The idea behind Transamerica Financial Life and Global Growth Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Global Growth vs. John Hancock Financial | Global Growth vs. Goldman Sachs Financial | Global Growth vs. Financials Ultrasector Profund | Global Growth vs. Transamerica Financial Life |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |