Correlation Between Transamerica Emerging and Gmo Asset
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and Gmo Asset 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 Gmo Asset 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 Gmo Asset Allocation, you can compare the effects of market volatilities on Transamerica Emerging and Gmo Asset 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 Gmo Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Gmo Asset.
Diversification Opportunities for Transamerica Emerging and Gmo Asset
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transamerica and Gmo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Gmo Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Asset Allocation 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 Gmo Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Asset Allocation has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Gmo Asset go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Gmo Asset
Assuming the 90 days horizon Transamerica Emerging Markets is expected to generate 0.89 times more return on investment than Gmo Asset. However, Transamerica Emerging Markets is 1.12 times less risky than Gmo Asset. It trades about 0.04 of its potential returns per unit of risk. Gmo Asset Allocation is currently generating about 0.01 per unit of risk. If you would invest 793.00 in Transamerica Emerging Markets on October 31, 2024 and sell it today you would earn a total of 5.00 from holding Transamerica Emerging Markets or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Gmo Asset Allocation
Performance |
| Timeline |
| Transamerica Emerging |
| Gmo Asset Allocation |
Transamerica Emerging and Gmo Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Gmo Asset
The main advantage of trading using opposite Transamerica Emerging and Gmo Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, Gmo Asset 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 Gmo Asset will offset losses from the drop in Gmo Asset's long position.| Transamerica Emerging vs. Putnam Global Financials | Transamerica Emerging vs. Financial Industries Fund | Transamerica Emerging vs. Pimco Capital Sec | Transamerica Emerging vs. Prudential Financial Services |
| Gmo Asset vs. Morningstar Defensive Bond | Gmo Asset vs. Doubleline Total Return | Gmo Asset vs. Federated Ohio Municipal | Gmo Asset vs. Pace Municipal Fixed |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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