Correlation Between Great West and Transamerica Asset
Can any of the company-specific risk be diversified away by investing in both Great West and Transamerica Asset 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 Great West and Transamerica Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Loomis Sayles and Transamerica Asset Allocation, you can compare the effects of market volatilities on Great West and Transamerica Asset 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 Great West with a short position of Transamerica Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Transamerica Asset.
Diversification Opportunities for Great West and Transamerica Asset
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Transamerica is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and Great West 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 Great West Loomis Sayles are associated (or correlated) with Transamerica Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Asset has no effect on the direction of Great West i.e., Great West and Transamerica Asset go up and down completely randomly.
Pair Corralation between Great West and Transamerica Asset
Assuming the 90 days horizon Great West Loomis Sayles is expected to generate 2.31 times more return on investment than Transamerica Asset. However, Great West is 2.31 times more volatile than Transamerica Asset Allocation. It trades about 0.03 of its potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.05 per unit of risk. If you would invest 3,460 in Great West Loomis Sayles on October 25, 2024 and sell it today you would earn a total of 519.00 from holding Great West Loomis Sayles or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Loomis Sayles vs. Transamerica Asset Allocation
Performance |
| Timeline |
| Great West Loomis |
| Transamerica Asset |
Great West and Transamerica Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Transamerica Asset
The main advantage of trading using opposite Great West and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Transamerica Asset 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 Transamerica Asset will offset losses from the drop in Transamerica Asset's long position.| Great West vs. Cmg Ultra Short | Great West vs. Fidelity Flex Servative | Great West vs. Nuveen Short Duration High | Great West vs. Leader Short Term Bond |
| Transamerica Asset vs. Large Cap Growth Profund | Transamerica Asset vs. Ab Large Cap | Transamerica Asset vs. Guidemark Large Cap | Transamerica Asset vs. Calvert Large Cap |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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