Correlation Between Transamerica Emerging and American Beacon
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and American Beacon 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 American Beacon 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 American Beacon Twentyfour, you can compare the effects of market volatilities on Transamerica Emerging and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and American Beacon.
Diversification Opportunities for Transamerica Emerging and American Beacon
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Transamerica and American is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Twen has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and American Beacon go up and down completely randomly.
Pair Corralation between Transamerica Emerging and American Beacon
Assuming the 90 days horizon Transamerica Emerging is expected to generate 1.17 times less return on investment than American Beacon. In addition to that, Transamerica Emerging is 9.9 times more volatile than American Beacon Twentyfour. It trades about 0.02 of its total potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.27 per unit of volatility. If you would invest 781.00 in American Beacon Twentyfour on August 29, 2024 and sell it today you would earn a total of 103.00 from holding American Beacon Twentyfour or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. American Beacon Twentyfour
Performance |
| Timeline |
| Transamerica Emerging |
| American Beacon Twen |
Transamerica Emerging and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and American Beacon
The main advantage of trading using opposite Transamerica Emerging and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Transamerica Emerging vs. Vanguard Emerging Markets | Transamerica Emerging vs. Vanguard Emerging Markets | Transamerica Emerging vs. HUMANA INC | Transamerica Emerging vs. Aquagold International |
| American Beacon vs. Transamerica Emerging Markets | American Beacon vs. Arrow Managed Futures | American Beacon vs. Vanguard Emerging Markets | American Beacon vs. Ep Emerging Markets |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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