Correlation Between Transamerica Asset and Large Cap
Can any of the company-specific risk be diversified away by investing in both Transamerica Asset and Large Cap 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 Large Cap 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 Large Cap Equity, you can compare the effects of market volatilities on Transamerica Asset and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and Large Cap.
Diversification Opportunities for Transamerica Asset and Large Cap
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Transamerica and Large is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and Large Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Equity 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Equity has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and Large Cap go up and down completely randomly.
Pair Corralation between Transamerica Asset and Large Cap
Assuming the 90 days horizon Transamerica Asset is expected to generate 1.94 times less return on investment than Large Cap. But when comparing it to its historical volatility, Transamerica Asset Allocation is 1.93 times less risky than Large Cap. It trades about 0.08 of its potential returns per unit of risk. Large Cap Equity is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,022 in Large Cap Equity on November 6, 2024 and sell it today you would earn a total of 655.00 from holding Large Cap Equity or generate 32.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Asset Allocation vs. Large Cap Equity
Performance |
| Timeline |
| Transamerica Asset |
| Large Cap Equity |
Transamerica Asset and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Asset and Large Cap
The main advantage of trading using opposite Transamerica Asset and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Asset position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Transamerica Asset vs. Dunham High Yield | Transamerica Asset vs. Tiaa Cref High Yield | Transamerica Asset vs. Virtus High Yield | Transamerica Asset vs. Msift High Yield |
| Large Cap vs. Aamhimco Short Duration | Large Cap vs. Siit Ultra Short | Large Cap vs. Rbc Short Duration | Large Cap vs. Old Westbury Short Term |
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 CEOs Directory module to screen CEOs from public companies around the world.
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