Correlation Between Transamerica Emerging and Nasdaq-100(r)
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and Nasdaq-100(r) 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 Nasdaq-100(r) 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Transamerica Emerging and Nasdaq-100(r) 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 Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Nasdaq-100(r).
Diversification Opportunities for Transamerica Emerging and Nasdaq-100(r)
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Transamerica and Nasdaq-100(r) is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Nasdaq-100(r) go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Nasdaq-100(r)
Assuming the 90 days horizon Transamerica Emerging Markets is expected to under-perform the Nasdaq-100(r). But the mutual fund apears to be less risky and, when comparing its historical volatility, Transamerica Emerging Markets is 2.95 times less risky than Nasdaq-100(r). The mutual fund trades about -0.14 of its potential returns per unit of risk. The Nasdaq 100 2x Strategy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 38,727 in Nasdaq 100 2x Strategy on August 24, 2024 and sell it today you would earn a total of 2,331 from holding Nasdaq 100 2x Strategy or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Transamerica Emerging |
| Nasdaq 100 2x |
Transamerica Emerging and Nasdaq-100(r) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Nasdaq-100(r)
The main advantage of trading using opposite Transamerica Emerging and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.| Transamerica Emerging vs. Artisan High Income | Transamerica Emerging vs. Ab Global Risk | Transamerica Emerging vs. Goldman Sachs High | Transamerica Emerging vs. Ab Global Risk |
| Nasdaq-100(r) vs. Goldman Sachs Large | Nasdaq-100(r) vs. Federated Mdt Large | Nasdaq-100(r) vs. Qs Large Cap | Nasdaq-100(r) vs. Aqr Large Cap |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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