Correlation Between NYSE Composite and Transamerica
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Transamerica 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 NYSE Composite and Transamerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Transamerica Growth R6, you can compare the effects of market volatilities on NYSE Composite and Transamerica 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 NYSE Composite with a short position of Transamerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Transamerica.
Diversification Opportunities for NYSE Composite and Transamerica
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Transamerica is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Transamerica Growth R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Growth and NYSE Composite 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 NYSE Composite are associated (or correlated) with Transamerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Growth has no effect on the direction of NYSE Composite i.e., NYSE Composite and Transamerica go up and down completely randomly.
Pair Corralation between NYSE Composite and Transamerica
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.02 times less return on investment than Transamerica. But when comparing it to its historical volatility, NYSE Composite is 1.55 times less risky than Transamerica. It trades about 0.42 of its potential returns per unit of risk. Transamerica Growth R6 is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,292 in Transamerica Growth R6 on September 1, 2024 and sell it today you would earn a total of 188.00 from holding Transamerica Growth R6 or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Transamerica Growth R6
Performance |
| Timeline |
NYSE Composite and Transamerica Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Transamerica Growth R6
Pair trading matchups for Transamerica
Pair Trading with NYSE Composite and Transamerica
The main advantage of trading using opposite NYSE Composite and Transamerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Transamerica 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 will offset losses from the drop in Transamerica's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Transamerica vs. Transamerica Emerging Markets | Transamerica vs. Transamerica Emerging Markets | Transamerica vs. Transamerica Emerging Markets | Transamerica vs. Transamerica Capital Growth |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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