Correlation Between Transamerica Emerging and Municipal Bond
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and Municipal Bond 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 Municipal Bond 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 Municipal Bond Fund, you can compare the effects of market volatilities on Transamerica Emerging and Municipal Bond 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 Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Municipal Bond.
Diversification Opportunities for Transamerica Emerging and Municipal Bond
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Transamerica and Municipal is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Municipal Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond 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 Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Municipal Bond go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Municipal Bond
Assuming the 90 days horizon Transamerica Emerging Markets is expected to under-perform the Municipal Bond. In addition to that, Transamerica Emerging is 2.56 times more volatile than Municipal Bond Fund. It trades about -0.17 of its total potential returns per unit of risk. Municipal Bond Fund is currently generating about 0.16 per unit of volatility. If you would invest 978.00 in Municipal Bond Fund on September 3, 2024 and sell it today you would earn a total of 9.00 from holding Municipal Bond Fund or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Municipal Bond Fund
Performance |
| Timeline |
| Transamerica Emerging |
| Municipal Bond |
Transamerica Emerging and Municipal Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Municipal Bond
The main advantage of trading using opposite Transamerica Emerging and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, Municipal Bond 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 Municipal Bond will offset losses from the drop in Municipal Bond's long position.| Transamerica Emerging vs. Guggenheim High Yield | Transamerica Emerging vs. Lord Abbett High | Transamerica Emerging vs. Msift High Yield | Transamerica Emerging vs. Ppm High Yield |
| Municipal Bond vs. Commodities Strategy Fund | Municipal Bond vs. Small Cap Stock | Municipal Bond vs. Balanced Fund Investor | Municipal Bond vs. Omni Small Cap Value |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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