Correlation Between Transamerica Intermediate and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate 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 Intermediate 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 Intermediate Muni and Ashmore Emerging Markets, you can compare the effects of market volatilities on Transamerica Intermediate 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 Intermediate with a short position of Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Ashmore Emerging.
Diversification Opportunities for Transamerica Intermediate and Ashmore Emerging
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transamerica and Ashmore is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni 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 Intermediate 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 Intermediate Muni 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 Intermediate i.e., Transamerica Intermediate and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Ashmore Emerging
Assuming the 90 days horizon Transamerica Intermediate is expected to generate 1.19 times less return on investment than Ashmore Emerging. But when comparing it to its historical volatility, Transamerica Intermediate Muni is 5.48 times less risky than Ashmore Emerging. It trades about 0.49 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,398 in Ashmore Emerging Markets on September 13, 2024 and sell it today you would earn a total of 22.00 from holding Ashmore Emerging Markets or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Transamerica Intermediate |
| Ashmore Emerging Markets |
Transamerica Intermediate and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Ashmore Emerging
The main advantage of trading using opposite Transamerica Intermediate and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate 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 Intermediate vs. Champlain Mid Cap | Transamerica Intermediate vs. Praxis Growth Index | Transamerica Intermediate vs. Artisan Small Cap | Transamerica Intermediate vs. Chase Growth Fund |
| Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore Emerging Markets | Ashmore Emerging vs. Ashmore 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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