Correlation Between Transamerica Inflation and Transamerica Asset
Can any of the company-specific risk be diversified away by investing in both Transamerica Inflation and Transamerica Asset 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 Inflation and Transamerica Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Inflation Opportunities and Transamerica Asset Allocation, you can compare the effects of market volatilities on Transamerica Inflation and Transamerica Asset 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 Inflation with a short position of Transamerica Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Inflation and Transamerica Asset.
Diversification Opportunities for Transamerica Inflation and Transamerica Asset
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transamerica and Transamerica is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Inflation Opportu and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and Transamerica Inflation 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 Inflation Opportunities are associated (or correlated) with Transamerica Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Asset has no effect on the direction of Transamerica Inflation i.e., Transamerica Inflation and Transamerica Asset go up and down completely randomly.
Pair Corralation between Transamerica Inflation and Transamerica Asset
Assuming the 90 days horizon Transamerica Inflation is expected to generate 12.23 times less return on investment than Transamerica Asset. But when comparing it to its historical volatility, Transamerica Inflation Opportunities is 1.57 times less risky than Transamerica Asset. It trades about 0.05 of its potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 987.00 in Transamerica Asset Allocation on August 31, 2024 and sell it today you would earn a total of 39.00 from holding Transamerica Asset Allocation or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Inflation Opportu vs. Transamerica Asset Allocation
Performance |
| Timeline |
| Transamerica Inflation |
| Transamerica Asset |
Transamerica Inflation and Transamerica Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Inflation and Transamerica Asset
The main advantage of trading using opposite Transamerica Inflation and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Inflation position performs unexpectedly, Transamerica Asset 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 Transamerica Asset will offset losses from the drop in Transamerica Asset's long position.The idea behind Transamerica Inflation Opportunities and Transamerica Asset Allocation 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.
| Transamerica Asset vs. American Funds American | Transamerica Asset vs. American Funds American | Transamerica Asset vs. American Balanced | Transamerica Asset vs. American Balanced Fund |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |