Correlation Between Transamerica Intl and Aston/crosswind Small
Can any of the company-specific risk be diversified away by investing in both Transamerica Intl and Aston/crosswind 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 Intl and Aston/crosswind Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Intl Equity and Astoncrosswind Small Cap, you can compare the effects of market volatilities on Transamerica Intl and Aston/crosswind 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 Intl with a short position of Aston/crosswind Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intl and Aston/crosswind Small.
Diversification Opportunities for Transamerica Intl and Aston/crosswind Small
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Aston/crosswind is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intl Equity and Astoncrosswind Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astoncrosswind Small Cap and Transamerica Intl 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 Intl Equity are associated (or correlated) with Aston/crosswind Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astoncrosswind Small Cap has no effect on the direction of Transamerica Intl i.e., Transamerica Intl and Aston/crosswind Small go up and down completely randomly.
Pair Corralation between Transamerica Intl and Aston/crosswind Small
Assuming the 90 days horizon Transamerica Intl Equity is expected to generate 0.93 times more return on investment than Aston/crosswind Small. However, Transamerica Intl Equity is 1.08 times less risky than Aston/crosswind Small. It trades about 0.31 of its potential returns per unit of risk. Astoncrosswind Small Cap is currently generating about 0.18 per unit of risk. If you would invest 2,056 in Transamerica Intl Equity on November 9, 2024 and sell it today you would earn a total of 112.00 from holding Transamerica Intl Equity or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Intl Equity vs. Astoncrosswind Small Cap
Performance |
| Timeline |
| Transamerica Intl Equity |
| Astoncrosswind Small Cap |
Transamerica Intl and Aston/crosswind Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intl and Aston/crosswind Small
The main advantage of trading using opposite Transamerica Intl and Aston/crosswind Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intl position performs unexpectedly, Aston/crosswind 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 Aston/crosswind Small will offset losses from the drop in Aston/crosswind Small's long position.The idea behind Transamerica Intl Equity and Astoncrosswind 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.
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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