Correlation Between Western Asset and Transamerica Funds
Can any of the company-specific risk be diversified away by investing in both Western Asset and Transamerica Funds 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 Western Asset and Transamerica Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Transamerica Funds , you can compare the effects of market volatilities on Western Asset and Transamerica Funds 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 Western Asset with a short position of Transamerica Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Transamerica Funds.
Diversification Opportunities for Western Asset and Transamerica Funds
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Transamerica is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Transamerica Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Funds and Western Asset 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 Western Asset High are associated (or correlated) with Transamerica Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Funds has no effect on the direction of Western Asset i.e., Western Asset and Transamerica Funds go up and down completely randomly.
Pair Corralation between Western Asset and Transamerica Funds
Assuming the 90 days horizon Western Asset High is expected to generate 1.26 times more return on investment than Transamerica Funds. However, Western Asset is 1.26 times more volatile than Transamerica Funds . It trades about 0.19 of its potential returns per unit of risk. Transamerica Funds is currently generating about 0.13 per unit of risk. If you would invest 683.00 in Western Asset High on September 3, 2024 and sell it today you would earn a total of 13.00 from holding Western Asset High or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Transamerica Funds
Performance |
| Timeline |
| Western Asset High |
| Transamerica Funds |
Western Asset and Transamerica Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Transamerica Funds
The main advantage of trading using opposite Western Asset and Transamerica Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Transamerica Funds 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 Funds will offset losses from the drop in Transamerica Funds' long position.| Western Asset vs. Lord Abbett Convertible | Western Asset vs. Allianzgi Convertible Income | Western Asset vs. Putnam Convertible Incm Gwth | Western Asset vs. Virtus Convertible |
| Transamerica Funds vs. Vanguard Total Stock | Transamerica Funds vs. Vanguard 500 Index | Transamerica Funds vs. Vanguard Total Stock | Transamerica Funds vs. Vanguard Total Stock |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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