Correlation Between Transamerica Funds and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Transamerica Funds and Ashmore Emerging 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 Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Funds and Ashmore Emerging Markets, you can compare the effects of market volatilities on Transamerica Funds and Ashmore Emerging 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 Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Funds and Ashmore Emerging.
Diversification Opportunities for Transamerica Funds and Ashmore Emerging
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Ashmore is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Funds and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets 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 Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Transamerica Funds i.e., Transamerica Funds and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Transamerica Funds and Ashmore Emerging
Assuming the 90 days horizon Transamerica Funds is expected to generate 1.04 times less return on investment than Ashmore Emerging. But when comparing it to its historical volatility, Transamerica Funds is 1.68 times less risky than Ashmore Emerging. It trades about 0.13 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 571.00 in Ashmore Emerging Markets on September 4, 2024 and sell it today you would earn a total of 6.00 from holding Ashmore Emerging Markets or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Transamerica Funds vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Transamerica Funds |
| Ashmore Emerging Markets |
Transamerica Funds and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Funds and Ashmore Emerging
The main advantage of trading using opposite Transamerica Funds and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Funds position performs unexpectedly, Ashmore Emerging 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging'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 |
| Ashmore Emerging vs. California High Yield Municipal | Ashmore Emerging vs. Federated Pennsylvania Municipal | Ashmore Emerging vs. Transamerica Funds | Ashmore Emerging vs. Limited Term Tax |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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