Correlation Between Transamerica Funds and American Funds
Can any of the company-specific risk be diversified away by investing in both Transamerica Funds and American Funds 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 Funds 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 Funds Smallcap, you can compare the effects of market volatilities on Transamerica Funds and American Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Funds and American Funds.
Diversification Opportunities for Transamerica Funds and American Funds
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and American is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Funds and American Funds Smallcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Smallcap 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Smallcap has no effect on the direction of Transamerica Funds i.e., Transamerica Funds and American Funds go up and down completely randomly.
Pair Corralation between Transamerica Funds and American Funds
If you would invest 7,133 in American Funds Smallcap on August 29, 2024 and sell it today you would earn a total of 43.00 from holding American Funds Smallcap or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Transamerica Funds vs. American Funds Smallcap
Performance |
| Timeline |
| Transamerica Funds |
| American Funds Smallcap |
Transamerica Funds and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Funds and American Funds
The main advantage of trading using opposite Transamerica Funds and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Funds position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' 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 Funds vs. Transamerica Funds | American Funds vs. Artisan High Income | American Funds vs. Blrc Sgy Mnp | American Funds vs. Bbh Intermediate Municipal |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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