Correlation Between Transamerica Emerging and New Alternatives
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and New Alternatives 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 New Alternatives 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 New Alternatives Fund, you can compare the effects of market volatilities on Transamerica Emerging and New Alternatives 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 New Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and New Alternatives.
Diversification Opportunities for Transamerica Emerging and New Alternatives
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and New is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and New Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Alternatives 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 New Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Alternatives has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and New Alternatives go up and down completely randomly.
Pair Corralation between Transamerica Emerging and New Alternatives
Assuming the 90 days horizon Transamerica Emerging Markets is expected to generate 0.86 times more return on investment than New Alternatives. However, Transamerica Emerging Markets is 1.16 times less risky than New Alternatives. It trades about 0.16 of its potential returns per unit of risk. New Alternatives Fund is currently generating about 0.13 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. New Alternatives Fund
Performance |
| Timeline |
| Transamerica Emerging |
| New Alternatives |
Transamerica Emerging and New Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and New Alternatives
The main advantage of trading using opposite Transamerica Emerging and New Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, New Alternatives 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 New Alternatives will offset losses from the drop in New Alternatives' 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 |
| New Alternatives vs. Inverse Government Long | New Alternatives vs. Lord Abbett Government | New Alternatives vs. Sit Government Securities | New Alternatives vs. Hsbc Government Money |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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