Correlation Between Transamerica Funds and First American
Can any of the company-specific risk be diversified away by investing in both Transamerica Funds and First American 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 First American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Funds and First American Funds, you can compare the effects of market volatilities on Transamerica Funds and First American 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 First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Funds and First American.
Diversification Opportunities for Transamerica Funds and First American
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Transamerica and First is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Funds and First American Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Funds 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 First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Funds has no effect on the direction of Transamerica Funds i.e., Transamerica Funds and First American go up and down completely randomly.
Pair Corralation between Transamerica Funds and First American
Assuming the 90 days horizon Transamerica Funds is expected to generate 48.0 times less return on investment than First American. In addition to that, Transamerica Funds is 1.89 times more volatile than First American Funds. It trades about 0.0 of its total potential returns per unit of risk. First American Funds is currently generating about 0.14 per unit of volatility. If you would invest 91.00 in First American Funds on September 3, 2024 and sell it today you would earn a total of 9.00 from holding First American Funds or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 63.84% |
| Values | Daily Returns |
Transamerica Funds vs. First American Funds
Performance |
| Timeline |
| Transamerica Funds |
| First American Funds |
Transamerica Funds and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Funds and First American
The main advantage of trading using opposite Transamerica Funds and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Funds position performs unexpectedly, First American 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 American will offset losses from the drop in First American's long position.| Transamerica Funds vs. Goldman Sachs Financial | Transamerica Funds vs. John Hancock Financial | Transamerica Funds vs. Davis Financial Fund | Transamerica Funds vs. Fidelity Advisor Financial |
| First American vs. Vanguard Total Stock | First American vs. Vanguard 500 Index | First American vs. Vanguard Total Stock | First American vs. Vanguard Total Stock |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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