Correlation Between Transamerica Emerging and First Investors
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and First Investors 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 First Investors 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 First Investors Select, you can compare the effects of market volatilities on Transamerica Emerging and First Investors 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 First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and First Investors.
Diversification Opportunities for Transamerica Emerging and First Investors
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transamerica and First is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and First Investors go up and down completely randomly.
Pair Corralation between Transamerica Emerging and First Investors
Assuming the 90 days horizon Transamerica Emerging Markets is expected to generate 0.41 times more return on investment than First Investors. However, Transamerica Emerging Markets is 2.46 times less risky than First Investors. It trades about 0.16 of its potential returns per unit of risk. First Investors Select is currently generating about -0.04 per unit of risk. If you would invest 803.00 in Transamerica Emerging Markets on September 13, 2024 and sell it today you would earn a total of 16.00 from holding Transamerica Emerging Markets or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. First Investors Select
Performance |
| Timeline |
| Transamerica Emerging |
| First Investors Select |
Transamerica Emerging and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and First Investors
The main advantage of trading using opposite Transamerica Emerging and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.| Transamerica Emerging vs. Smallcap Growth Fund | Transamerica Emerging vs. L Abbett Growth | Transamerica Emerging vs. T Rowe Price | Transamerica Emerging vs. Mid Cap Growth |
| First Investors vs. Guggenheim Managed Futures | First Investors vs. Goldman Sachs Inflation | First Investors vs. Short Duration Inflation | First Investors vs. Schwab Treasury Inflation |
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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