Correlation Between Transamerica Asset and Gmo Global
Can any of the company-specific risk be diversified away by investing in both Transamerica Asset and Gmo Global 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 Asset and Gmo Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Asset Allocation and Gmo Global Equity, you can compare the effects of market volatilities on Transamerica Asset and Gmo Global 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 Asset with a short position of Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and Gmo Global.
Diversification Opportunities for Transamerica Asset and Gmo Global
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Gmo is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Equity and Transamerica 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 Transamerica Asset Allocation are associated (or correlated) with Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and Gmo Global go up and down completely randomly.
Pair Corralation between Transamerica Asset and Gmo Global
Assuming the 90 days horizon Transamerica Asset Allocation is expected to under-perform the Gmo Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Transamerica Asset Allocation is 1.38 times less risky than Gmo Global. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Gmo Global Equity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,793 in Gmo Global Equity on October 20, 2024 and sell it today you would earn a total of 48.00 from holding Gmo Global Equity or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Asset Allocation vs. Gmo Global Equity
Performance |
| Timeline |
| Transamerica Asset |
| Gmo Global Equity |
Transamerica Asset and Gmo Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Asset and Gmo Global
The main advantage of trading using opposite Transamerica Asset and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Asset position performs unexpectedly, Gmo Global 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 Gmo Global will offset losses from the drop in Gmo Global's long position.| Transamerica Asset vs. Western Assets Emerging | Transamerica Asset vs. Catalystmillburn Hedge Strategy | Transamerica Asset vs. Artisan Developing World | Transamerica Asset vs. Nasdaq 100 2x Strategy |
| Gmo Global vs. Conservative Balanced Allocation | Gmo Global vs. Voya Solution Conservative | Gmo Global vs. Allianzgi Diversified Income | Gmo Global vs. Lord Abbett Diversified |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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