Correlation Between Transamerica Asset and Highland Small-cap
Can any of the company-specific risk be diversified away by investing in both Transamerica Asset and Highland Small-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 Highland Small-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 Highland Small Cap Equity, you can compare the effects of market volatilities on Transamerica Asset and Highland Small-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 Highland Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and Highland Small-cap.
Diversification Opportunities for Transamerica Asset and Highland Small-cap
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transamerica and Highland is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and Highland Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Small Cap 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 Highland Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Small Cap has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and Highland Small-cap go up and down completely randomly.
Pair Corralation between Transamerica Asset and Highland Small-cap
Assuming the 90 days horizon Transamerica Asset Allocation is expected to generate 0.59 times more return on investment than Highland Small-cap. However, Transamerica Asset Allocation is 1.7 times less risky than Highland Small-cap. It trades about 0.14 of its potential returns per unit of risk. Highland Small Cap Equity is currently generating about 0.04 per unit of risk. If you would invest 1,101 in Transamerica Asset Allocation on September 4, 2024 and sell it today you would earn a total of 296.00 from holding Transamerica Asset Allocation or generate 26.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Asset Allocation vs. Highland Small Cap Equity
Performance |
| Timeline |
| Transamerica Asset |
| Highland Small Cap |
Transamerica Asset and Highland Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Asset and Highland Small-cap
The main advantage of trading using opposite Transamerica Asset and Highland Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Asset position performs unexpectedly, Highland Small-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 Highland Small-cap will offset losses from the drop in Highland Small-cap'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 |
| Highland Small-cap vs. Artisan Emerging Markets | Highland Small-cap vs. Transamerica Emerging Markets | Highland Small-cap vs. Legg Mason Partners | Highland Small-cap vs. Rbc Emerging Markets |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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