Correlation Between Transamerica Financial and High Income
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and High Income 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 High Income 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 High Income Fund, you can compare the effects of market volatilities on Transamerica Financial and High Income 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 High Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and High Income.
Diversification Opportunities for Transamerica Financial and High Income
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and HIGH is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and High Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Income Fund 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 High Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Income Fund has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and High Income go up and down completely randomly.
Pair Corralation between Transamerica Financial and High Income
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 4.63 times more return on investment than High Income. However, Transamerica Financial is 4.63 times more volatile than High Income Fund. It trades about 0.4 of its potential returns per unit of risk. High Income Fund is currently generating about 0.12 per unit of risk. 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 Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Transamerica Financial Life vs. High Income Fund
Performance |
| Timeline |
| Transamerica Financial |
| High Income Fund |
Transamerica Financial and High Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and High Income
The main advantage of trading using opposite Transamerica Financial and High Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, High Income 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 High Income will offset losses from the drop in High Income's long position.| Transamerica Financial vs. Blue Current Global | Transamerica Financial vs. Commonwealth Global Fund | Transamerica Financial vs. Rbc Global Opportunities | Transamerica Financial vs. Us Global Investors |
| High Income vs. Gamco Global Gold | High Income vs. Invesco Gold Special | High Income vs. Vy Goldman Sachs | High Income vs. Short Precious Metals |
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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