Correlation Between Transamerica Intermediate and California Municipal
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate and California Municipal 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 California Municipal 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 California Municipal Portfolio, you can compare the effects of market volatilities on Transamerica Intermediate and California Municipal 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 California Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and California Municipal.
Diversification Opportunities for Transamerica Intermediate and California Municipal
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Transamerica and California is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and California Municipal Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Municipal 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 California Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Municipal has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and California Municipal go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and California Municipal
Assuming the 90 days horizon Transamerica Intermediate Muni is expected to under-perform the California Municipal. In addition to that, Transamerica Intermediate is 1.48 times more volatile than California Municipal Portfolio. It trades about -0.02 of its total potential returns per unit of risk. California Municipal Portfolio is currently generating about 0.02 per unit of volatility. If you would invest 1,381 in California Municipal Portfolio on October 29, 2024 and sell it today you would earn a total of 1.00 from holding California Municipal Portfolio or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. California Municipal Portfolio
Performance |
| Timeline |
| Transamerica Intermediate |
| California Municipal |
Transamerica Intermediate and California Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and California Municipal
The main advantage of trading using opposite Transamerica Intermediate and California Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate position performs unexpectedly, California Municipal 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 California Municipal will offset losses from the drop in California Municipal's long position.| Transamerica Intermediate vs. The Gold Bullion | Transamerica Intermediate vs. Invesco Gold Special | Transamerica Intermediate vs. Wells Fargo Advantage | Transamerica Intermediate vs. Wells Fargo Advantage |
| California Municipal vs. Vy T Rowe | California Municipal vs. Stone Ridge Diversified | California Municipal vs. Delaware Limited Term Diversified | California Municipal vs. T Rowe Price |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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