Correlation Between Transamerica Asset and Great West
Can any of the company-specific risk be diversified away by investing in both Transamerica Asset and Great West 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 Great West 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 Great West Lifetime 2020, you can compare the effects of market volatilities on Transamerica Asset and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and Great West.
Diversification Opportunities for Transamerica Asset and Great West
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transamerica and Great is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and Great West Lifetime 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifetime has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and Great West go up and down completely randomly.
Pair Corralation between Transamerica Asset and Great West
Assuming the 90 days horizon Transamerica Asset Allocation is expected to under-perform the Great West. In addition to that, Transamerica Asset is 3.65 times more volatile than Great West Lifetime 2020. It trades about -0.05 of its total potential returns per unit of risk. Great West Lifetime 2020 is currently generating about 0.1 per unit of volatility. If you would invest 1,025 in Great West Lifetime 2020 on October 24, 2024 and sell it today you would earn a total of 7.00 from holding Great West Lifetime 2020 or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Asset Allocation vs. Great West Lifetime 2020
Performance |
| Timeline |
| Transamerica Asset |
| Great West Lifetime |
Transamerica Asset and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Asset and Great West
The main advantage of trading using opposite Transamerica Asset and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Asset position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Transamerica Asset vs. Sp Midcap Index | Transamerica Asset vs. Ab All Market | Transamerica Asset vs. Legg Mason Partners | Transamerica Asset vs. Bbh Trust |
| Great West vs. Legg Mason Global | Great West vs. Transamerica Asset Allocation | Great West vs. Dreyfusstandish Global Fixed | Great West vs. Rbc Global Equity |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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