Correlation Between Transamerica Emerging and Cullen Enhanced
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and Cullen Enhanced 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 Cullen Enhanced 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 Cullen Enhanced Equity, you can compare the effects of market volatilities on Transamerica Emerging and Cullen Enhanced 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 Cullen Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Cullen Enhanced.
Diversification Opportunities for Transamerica Emerging and Cullen Enhanced
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transamerica and Cullen is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Cullen Enhanced Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Enhanced Equity 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 Cullen Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Enhanced Equity has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Cullen Enhanced go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Cullen Enhanced
Assuming the 90 days horizon Transamerica Emerging is expected to generate 1.78 times less return on investment than Cullen Enhanced. In addition to that, Transamerica Emerging is 1.43 times more volatile than Cullen Enhanced Equity. It trades about 0.03 of its total potential returns per unit of risk. Cullen Enhanced Equity is currently generating about 0.07 per unit of volatility. If you would invest 957.00 in Cullen Enhanced Equity on September 2, 2024 and sell it today you would earn a total of 147.00 from holding Cullen Enhanced Equity or generate 15.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Cullen Enhanced Equity
Performance |
| Timeline |
| Transamerica Emerging |
| Cullen Enhanced Equity |
Transamerica Emerging and Cullen Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Cullen Enhanced
The main advantage of trading using opposite Transamerica Emerging and Cullen Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, Cullen Enhanced 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 Cullen Enhanced will offset losses from the drop in Cullen Enhanced's long position.| Transamerica Emerging vs. Fidelity Advisor Gold | Transamerica Emerging vs. Goldman Sachs Clean | Transamerica Emerging vs. Sprott Gold Equity | Transamerica Emerging vs. Precious Metals And |
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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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