Correlation Between Transamerica Intermediate and Mainstay International
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate and Mainstay International 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 Mainstay International 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 Mainstay International Opportunities, you can compare the effects of market volatilities on Transamerica Intermediate and Mainstay International 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 Mainstay International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Mainstay International.
Diversification Opportunities for Transamerica Intermediate and Mainstay International
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Transamerica and Mainstay is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Mainstay International Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay International 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 Mainstay International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay International has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Mainstay International go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Mainstay International
Assuming the 90 days horizon Transamerica Intermediate is expected to generate 1.71 times less return on investment than Mainstay International. But when comparing it to its historical volatility, Transamerica Intermediate Muni is 3.27 times less risky than Mainstay International. It trades about 0.08 of its potential returns per unit of risk. Mainstay International Opportunities is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 702.00 in Mainstay International Opportunities on September 2, 2024 and sell it today you would earn a total of 85.00 from holding Mainstay International Opportunities or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. Mainstay International Opportu
Performance |
| Timeline |
| Transamerica Intermediate |
| Mainstay International |
Transamerica Intermediate and Mainstay International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Mainstay International
The main advantage of trading using opposite Transamerica Intermediate and Mainstay International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate position performs unexpectedly, Mainstay International 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 Mainstay International will offset losses from the drop in Mainstay International's long position.The idea behind Transamerica Intermediate Muni and Mainstay International Opportunities 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.
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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