Correlation Between Transamerica International and Ab Impact
Can any of the company-specific risk be diversified away by investing in both Transamerica International and Ab Impact 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 International and Ab Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica International Equity and Ab Impact Municipal, you can compare the effects of market volatilities on Transamerica International and Ab Impact 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 International with a short position of Ab Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica International and Ab Impact.
Diversification Opportunities for Transamerica International and Ab Impact
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and ABIMX is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica International Equ and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal and Transamerica International 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 International Equity are associated (or correlated) with Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of Transamerica International i.e., Transamerica International and Ab Impact go up and down completely randomly.
Pair Corralation between Transamerica International and Ab Impact
Assuming the 90 days horizon Transamerica International Equity is expected to under-perform the Ab Impact. In addition to that, Transamerica International is 2.09 times more volatile than Ab Impact Municipal. It trades about -0.22 of its total potential returns per unit of risk. Ab Impact Municipal is currently generating about -0.02 per unit of volatility. If you would invest 998.00 in Ab Impact Municipal on August 29, 2024 and sell it today you would lose (4.00) from holding Ab Impact Municipal or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica International Equ vs. Ab Impact Municipal
Performance |
| Timeline |
| Transamerica International |
| Ab Impact Municipal |
Transamerica International and Ab Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica International and Ab Impact
The main advantage of trading using opposite Transamerica International and Ab Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica International position performs unexpectedly, Ab Impact 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 Ab Impact will offset losses from the drop in Ab Impact's long position.The idea behind Transamerica International Equity and Ab Impact Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Ab Impact vs. HUMANA INC | Ab Impact vs. Aquagold International | Ab Impact vs. Barloworld Ltd ADR | Ab Impact vs. Morningstar Unconstrained Allocation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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