Correlation Between Transamerica Emerging and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and Growth Strategy 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 Growth Strategy 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 Growth Strategy Fund, you can compare the effects of market volatilities on Transamerica Emerging and Growth Strategy 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 Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Growth Strategy.
Diversification Opportunities for Transamerica Emerging and Growth Strategy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and GROWTH is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy 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 Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Growth Strategy go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Growth Strategy
Assuming the 90 days horizon Transamerica Emerging Markets is expected to under-perform the Growth Strategy. In addition to that, Transamerica Emerging is 1.49 times more volatile than Growth Strategy Fund. It trades about -0.17 of its total potential returns per unit of risk. Growth Strategy Fund is currently generating about 0.34 per unit of volatility. If you would invest 1,167 in Growth Strategy Fund on September 4, 2024 and sell it today you would earn a total of 41.00 from holding Growth Strategy Fund or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Growth Strategy Fund
Performance |
| Timeline |
| Transamerica Emerging |
| Growth Strategy |
Transamerica Emerging and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Growth Strategy
The main advantage of trading using opposite Transamerica Emerging and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, Growth Strategy 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 Growth Strategy will offset losses from the drop in Growth Strategy's long position.The idea behind Transamerica Emerging Markets and Growth Strategy Fund 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.
| Growth Strategy vs. International Developed Markets | Growth Strategy vs. Global Real Estate | Growth Strategy vs. Global Real Estate | Growth Strategy vs. Global Real Estate |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |