Correlation Between Growth Fund and Transamerica Asset
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Growth Fund and Transamerica Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Transamerica Asset Allocation , you can compare the effects of market volatilities on Growth Fund 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 Growth Fund with a short position of Transamerica Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Transamerica Asset.
Diversification Opportunities for Growth Fund and Transamerica Asset
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Transamerica is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and Growth Fund 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 Growth Fund Of 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 Growth Fund i.e., Growth Fund and Transamerica Asset go up and down completely randomly.
Pair Corralation between Growth Fund and Transamerica Asset
Assuming the 90 days horizon Growth Fund is expected to generate 1.05 times less return on investment than Transamerica Asset. In addition to that, Growth Fund is 1.27 times more volatile than Transamerica Asset Allocation . It trades about 0.23 of its total potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.31 per unit of volatility. If you would invest 1,485 in Transamerica Asset Allocation on November 3, 2024 and sell it today you would earn a total of 74.00 from holding Transamerica Asset Allocation or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Growth Fund Of vs. Transamerica Asset Allocation
Performance |
| Timeline |
| Growth Fund |
| Transamerica Asset |
Growth Fund and Transamerica Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Transamerica Asset
The main advantage of trading using opposite Growth Fund and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. Growth Fund Of | Growth Fund vs. Growth Fund Of |
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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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