Correlation Between Transamerica Intermediate and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate and Amer Beacon 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 Amer Beacon 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 Amer Beacon Garcia, you can compare the effects of market volatilities on Transamerica Intermediate and Amer Beacon 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 Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Amer Beacon.
Diversification Opportunities for Transamerica Intermediate and Amer Beacon
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transamerica and Amer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Amer Beacon Garcia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Garcia 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 Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Garcia has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Amer Beacon go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Amer Beacon
Assuming the 90 days horizon Transamerica Intermediate Muni is expected to generate 0.7 times more return on investment than Amer Beacon. However, Transamerica Intermediate Muni is 1.42 times less risky than Amer Beacon. It trades about 0.01 of its potential returns per unit of risk. Amer Beacon Garcia is currently generating about -0.04 per unit of risk. If you would invest 1,065 in Transamerica Intermediate Muni on October 26, 2024 and sell it today you would earn a total of 1.00 from holding Transamerica Intermediate Muni or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. Amer Beacon Garcia
Performance |
| Timeline |
| Transamerica Intermediate |
| Amer Beacon Garcia |
Transamerica Intermediate and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Amer Beacon
The main advantage of trading using opposite Transamerica Intermediate and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate position performs unexpectedly, Amer Beacon 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 Amer Beacon will offset losses from the drop in Amer Beacon's long position.| Transamerica Intermediate vs. Virtus High Yield | Transamerica Intermediate vs. Msift High Yield | Transamerica Intermediate vs. Transamerica High Yield | Transamerica Intermediate vs. Gmo High Yield |
| Amer Beacon vs. Dws Government Money | Amer Beacon vs. Chestnut Street Exchange | Amer Beacon vs. Hsbc Treasury Money | Amer Beacon vs. Franklin Government Money |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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