Correlation Between Transamerica Emerging and Westwood Smallcap
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and Westwood Smallcap 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 Westwood Smallcap 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 Westwood Smallcap Growth, you can compare the effects of market volatilities on Transamerica Emerging and Westwood Smallcap 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 Westwood Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Westwood Smallcap.
Diversification Opportunities for Transamerica Emerging and Westwood Smallcap
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transamerica and Westwood is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Westwood Smallcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Smallcap Growth 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 Westwood Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Smallcap Growth has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Westwood Smallcap go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Westwood Smallcap
If you would invest 789.00 in Transamerica Emerging Markets on September 5, 2024 and sell it today you would earn a total of 11.00 from holding Transamerica Emerging Markets or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.81% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Westwood Smallcap Growth
Performance |
| Timeline |
| Transamerica Emerging |
| Westwood Smallcap Growth |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Transamerica Emerging and Westwood Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Westwood Smallcap
The main advantage of trading using opposite Transamerica Emerging and Westwood Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, Westwood Smallcap 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 Westwood Smallcap will offset losses from the drop in Westwood Smallcap's long position.The idea behind Transamerica Emerging Markets and Westwood Smallcap Growth 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.
| Westwood Smallcap vs. Transamerica Emerging Markets | Westwood Smallcap vs. Angel Oak Multi Strategy | Westwood Smallcap vs. Legg Mason Partners | Westwood Smallcap vs. Artisan 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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