Correlation Between Transamerica Asset and Cref Money
Can any of the company-specific risk be diversified away by investing in both Transamerica Asset and Cref Money 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 Cref Money 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 Cref Money Market, you can compare the effects of market volatilities on Transamerica Asset and Cref Money 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 Cref Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and Cref Money.
Diversification Opportunities for Transamerica Asset and Cref Money
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transamerica and Cref is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and Cref Money Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Money Market 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 Cref Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Money Market has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and Cref Money go up and down completely randomly.
Pair Corralation between Transamerica Asset and Cref Money
Assuming the 90 days horizon Transamerica Asset Allocation is expected to generate 32.8 times more return on investment than Cref Money. However, Transamerica Asset is 32.8 times more volatile than Cref Money Market. It trades about 0.07 of its potential returns per unit of risk. Cref Money Market is currently generating about 0.8 per unit of risk. If you would invest 1,145 in Transamerica Asset Allocation on October 11, 2024 and sell it today you would earn a total of 365.00 from holding Transamerica Asset Allocation or generate 31.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.17% |
| Values | Daily Returns |
Transamerica Asset Allocation vs. Cref Money Market
Performance |
| Timeline |
| Transamerica Asset |
| Cref Money Market |
Transamerica Asset and Cref Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Asset and Cref Money
The main advantage of trading using opposite Transamerica Asset and Cref Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Asset position performs unexpectedly, Cref Money 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 Cref Money will offset losses from the drop in Cref Money's long position.| Transamerica Asset vs. Franklin Small Cap | Transamerica Asset vs. Sp Smallcap 600 | Transamerica Asset vs. Kinetics Small Cap | Transamerica Asset vs. Ab Small Cap |
| Cref Money vs. Transamerica Asset Allocation | Cref Money vs. Touchstone Large Cap | Cref Money vs. Federated Global Allocation | Cref Money vs. Old Westbury Large |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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