Correlation Between Transamerica Emerging and Dreyfus Technology

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Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and Dreyfus Technology 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 Emerging and Dreyfus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Emerging Markets and Dreyfus Technology Growth, you can compare the effects of market volatilities on Transamerica Emerging and Dreyfus Technology 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 Emerging with a short position of Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Dreyfus Technology.

Diversification Opportunities for Transamerica Emerging and Dreyfus Technology

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Transamerica and Dreyfus is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Dreyfus Technology Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Technology Growth and Transamerica Emerging 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 Emerging Markets are associated (or correlated) with Dreyfus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Technology Growth has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Dreyfus Technology go up and down completely randomly.

Pair Corralation between Transamerica Emerging and Dreyfus Technology

Assuming the 90 days horizon Transamerica Emerging Markets is expected to generate 0.72 times more return on investment than Dreyfus Technology. However, Transamerica Emerging Markets is 1.39 times less risky than Dreyfus Technology. It trades about 0.01 of its potential returns per unit of risk. Dreyfus Technology Growth is currently generating about -0.02 per unit of risk. If you would invest  818.00  in Transamerica Emerging Markets on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Transamerica Emerging Markets or generate 0.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Transamerica Emerging Markets  vs.  Dreyfus Technology Growth

 Performance 
       Timeline  
Transamerica Emerging 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Emerging Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Transamerica Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Dreyfus Technology Growth 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Technology Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dreyfus Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Transamerica Emerging and Dreyfus Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Transamerica Emerging and Dreyfus Technology

The main advantage of trading using opposite Transamerica Emerging and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, Dreyfus Technology 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 Dreyfus Technology will offset losses from the drop in Dreyfus Technology's long position.
The idea behind Transamerica Emerging Markets and Dreyfus Technology Growth 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.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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