Correlation Between Transamerica Funds and American Beacon
Can any of the company-specific risk be diversified away by investing in both Transamerica Funds and American Beacon 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 Funds and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Funds and American Beacon Twentyfour, you can compare the effects of market volatilities on Transamerica Funds and American Beacon 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 Funds with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Funds and American Beacon.
Diversification Opportunities for Transamerica Funds and American Beacon
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transamerica and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Funds and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen and Transamerica Funds 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 Funds are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Twen has no effect on the direction of Transamerica Funds i.e., Transamerica Funds and American Beacon go up and down completely randomly.
Pair Corralation between Transamerica Funds and American Beacon
If you would invest 879.00 in American Beacon Twentyfour on September 3, 2024 and sell it today you would earn a total of 6.00 from holding American Beacon Twentyfour or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Funds vs. American Beacon Twentyfour
Performance |
| Timeline |
| Transamerica Funds |
| American Beacon Twen |
Transamerica Funds and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Funds and American Beacon
The main advantage of trading using opposite Transamerica Funds and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Funds position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Transamerica Funds vs. Vanguard Total Stock | Transamerica Funds vs. Vanguard 500 Index | Transamerica Funds vs. Vanguard Total Stock | Transamerica Funds vs. Vanguard Total Stock |
| American Beacon vs. John Hancock Money | American Beacon vs. Transamerica Funds | American Beacon vs. Wells Fargo Funds | American Beacon vs. Lord Abbett Emerging |
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 Stocks Directory module to find actively traded stocks across global markets.
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