Correlation Between Transamerica Intermediate and Natixis Us
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate and Natixis Us 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 Natixis Us 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 Natixis Equity Opportunities, you can compare the effects of market volatilities on Transamerica Intermediate and Natixis Us 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 Natixis Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Natixis Us.
Diversification Opportunities for Transamerica Intermediate and Natixis Us
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Natixis is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Natixis Equity Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natixis Equity Oppor 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 Natixis Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natixis Equity Oppor has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Natixis Us go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Natixis Us
Assuming the 90 days horizon Transamerica Intermediate is expected to generate 5.69 times less return on investment than Natixis Us. But when comparing it to its historical volatility, Transamerica Intermediate Muni is 4.3 times less risky than Natixis Us. It trades about 0.09 of its potential returns per unit of risk. Natixis Equity Opportunities is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,445 in Natixis Equity Opportunities on October 25, 2024 and sell it today you would earn a total of 32.00 from holding Natixis Equity Opportunities or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. Natixis Equity Opportunities
Performance |
| Timeline |
| Transamerica Intermediate |
| Natixis Equity Oppor |
Transamerica Intermediate and Natixis Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Natixis Us
The main advantage of trading using opposite Transamerica Intermediate and Natixis Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate position performs unexpectedly, Natixis Us 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 Natixis Us will offset losses from the drop in Natixis Us' long position.The idea behind Transamerica Intermediate Muni and Natixis Equity 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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