Correlation Between Transamerica Funds and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Transamerica Funds and Ishares Municipal 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 Funds and Ishares Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Funds and Ishares Municipal Bond, you can compare the effects of market volatilities on Transamerica Funds and Ishares Municipal 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 Funds with a short position of Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Funds and Ishares Municipal.
Diversification Opportunities for Transamerica Funds and Ishares Municipal
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transamerica and Ishares is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Funds and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond and Transamerica Funds 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 Funds are associated (or correlated) with Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Transamerica Funds i.e., Transamerica Funds and Ishares Municipal go up and down completely randomly.
Pair Corralation between Transamerica Funds and Ishares Municipal
Assuming the 90 days horizon Transamerica Funds is expected to generate 1.18 times less return on investment than Ishares Municipal. But when comparing it to its historical volatility, Transamerica Funds is 1.91 times less risky than Ishares Municipal. It trades about 0.13 of its potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,104 in Ishares Municipal Bond on September 3, 2024 and sell it today you would earn a total of 13.00 from holding Ishares Municipal Bond or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Funds vs. Ishares Municipal Bond
Performance |
| Timeline |
| Transamerica Funds |
| Ishares Municipal Bond |
Transamerica Funds and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Funds and Ishares Municipal
The main advantage of trading using opposite Transamerica Funds and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Funds position performs unexpectedly, Ishares Municipal 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.| Transamerica Funds vs. Vanguard Total Stock | Transamerica Funds vs. Vanguard 500 Index | Transamerica Funds vs. Vanguard Total Stock | Transamerica Funds vs. Vanguard Total Stock |
| Ishares Municipal vs. Vanguard Long Term Tax Exempt | Ishares Municipal vs. Vanguard High Yield Tax Exempt | Ishares Municipal vs. Franklin Federal Tax Free | Ishares Municipal vs. Franklin Federal Tax Free |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |