Correlation Between Transamerica Intermediate and Pax Small
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate and Pax Small 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 Pax Small 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 Pax Small Cap, you can compare the effects of market volatilities on Transamerica Intermediate and Pax Small 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 Pax Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Pax Small.
Diversification Opportunities for Transamerica Intermediate and Pax Small
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transamerica and Pax is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Pax Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Small Cap 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 Pax Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Small Cap has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Pax Small go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Pax Small
Assuming the 90 days horizon Transamerica Intermediate is expected to generate 5.02 times less return on investment than Pax Small. But when comparing it to its historical volatility, Transamerica Intermediate Muni is 5.06 times less risky than Pax Small. It trades about 0.11 of its potential returns per unit of risk. Pax Small Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,440 in Pax Small Cap on August 25, 2024 and sell it today you would earn a total of 447.00 from holding Pax Small Cap or generate 31.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. Pax Small Cap
Performance |
| Timeline |
| Transamerica Intermediate |
| Pax Small Cap |
Transamerica Intermediate and Pax Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Pax Small
The main advantage of trading using opposite Transamerica Intermediate and Pax Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate position performs unexpectedly, Pax Small 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 Pax Small will offset losses from the drop in Pax Small's long position.The idea behind Transamerica Intermediate Muni and Pax Small Cap 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.
| Pax Small vs. Metropolitan West Porate | Pax Small vs. Nuveen All American Municipal | Pax Small vs. Artisan High Income | Pax Small vs. Transamerica Intermediate Muni |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |