Correlation Between Western Asset and Transamerica Asset
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Transamerica Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Intermediate and Transamerica Asset Allocation, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Transamerica Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Transamerica Asset.
Diversification Opportunities for Western Asset and Transamerica Asset
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Transamerica is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Intermediate and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and Western Asset 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 Western Asset Intermediate 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 Western Asset i.e., Western Asset and Transamerica Asset go up and down completely randomly.
Pair Corralation between Western Asset and Transamerica Asset
Assuming the 90 days horizon Western Asset is expected to generate 4.99 times less return on investment than Transamerica Asset. But when comparing it to its historical volatility, Western Asset Intermediate is 3.09 times less risky than Transamerica Asset. It trades about 0.06 of its potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,073 in Transamerica Asset Allocation on September 3, 2024 and sell it today you would earn a total of 323.00 from holding Transamerica Asset Allocation or generate 30.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Intermediate vs. Transamerica Asset Allocation
Performance |
| Timeline |
| Western Asset Interm |
| Transamerica Asset |
Western Asset and Transamerica Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Transamerica Asset
The main advantage of trading using opposite Western Asset and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Transamerica Asset Allocation | Western Asset vs. T Rowe Price | Western Asset vs. T Rowe Price | Western Asset vs. Legg Mason Partners |
| Transamerica Asset vs. American Funds American | Transamerica Asset vs. American Funds American | Transamerica Asset vs. American Balanced | Transamerica Asset vs. American Balanced Fund |
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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