Correlation Between Transamerica Asset and Prudential Floating
Can any of the company-specific risk be diversified away by investing in both Transamerica Asset and Prudential Floating 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 Prudential Floating 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 Prudential Floating Rate, you can compare the effects of market volatilities on Transamerica Asset and Prudential Floating 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 Prudential Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and Prudential Floating.
Diversification Opportunities for Transamerica Asset and Prudential Floating
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transamerica and Prudential is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and Prudential Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Floating Rate 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 Prudential Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Floating Rate has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and Prudential Floating go up and down completely randomly.
Pair Corralation between Transamerica Asset and Prudential Floating
Assuming the 90 days horizon Transamerica Asset Allocation is expected to generate 3.4 times more return on investment than Prudential Floating. However, Transamerica Asset is 3.4 times more volatile than Prudential Floating Rate. It trades about 0.13 of its potential returns per unit of risk. Prudential Floating Rate is currently generating about 0.21 per unit of risk. If you would invest 1,159 in Transamerica Asset Allocation on September 4, 2024 and sell it today you would earn a total of 238.00 from holding Transamerica Asset Allocation or generate 20.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Asset Allocation vs. Prudential Floating Rate
Performance |
| Timeline |
| Transamerica Asset |
| Prudential Floating Rate |
Transamerica Asset and Prudential Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Asset and Prudential Floating
The main advantage of trading using opposite Transamerica Asset and Prudential Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Asset position performs unexpectedly, Prudential Floating 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 Prudential Floating will offset losses from the drop in Prudential Floating's long position.| Transamerica Asset vs. 361 Global Longshort | Transamerica Asset vs. Barings Global Floating | Transamerica Asset vs. Commonwealth Global Fund | Transamerica Asset vs. Ab Global Bond |
| Prudential Floating vs. Firsthand Alternative Energy | Prudential Floating vs. Fidelity Advisor Energy | Prudential Floating vs. Energy Basic Materials | Prudential Floating vs. Energy Basic Materials |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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