Correlation Between Transamerica Asset and First Investors
Can any of the company-specific risk be diversified away by investing in both Transamerica Asset and First Investors 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 First Investors 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 First Investors Select, you can compare the effects of market volatilities on Transamerica Asset and First Investors 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 First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and First Investors.
Diversification Opportunities for Transamerica Asset and First Investors
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Transamerica and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and First Investors go up and down completely randomly.
Pair Corralation between Transamerica Asset and First Investors
Assuming the 90 days horizon Transamerica Asset Allocation is expected to generate 0.29 times more return on investment than First Investors. However, Transamerica Asset Allocation is 3.51 times less risky than First Investors. It trades about 0.12 of its potential returns per unit of risk. First Investors Select is currently generating about -0.04 per unit of risk. If you would invest 1,388 in Transamerica Asset Allocation on September 12, 2024 and sell it today you would earn a total of 15.00 from holding Transamerica Asset Allocation or generate 1.08% 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. First Investors Select
Performance |
| Timeline |
| Transamerica Asset |
| First Investors Select |
Transamerica Asset and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Asset and First Investors
The main advantage of trading using opposite Transamerica Asset and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Asset position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.| Transamerica Asset vs. Calvert Moderate Allocation | Transamerica Asset vs. Qs Moderate Growth | Transamerica Asset vs. College Retirement Equities | Transamerica Asset vs. Sa Worldwide Moderate |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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