Correlation Between Teton Convertible and Transamerica Small/mid
Can any of the company-specific risk be diversified away by investing in both Teton Convertible and Transamerica Small/mid 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 Teton Convertible and Transamerica Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teton Vertible Securities and Transamerica Smallmid Cap, you can compare the effects of market volatilities on Teton Convertible and Transamerica Small/mid 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 Teton Convertible with a short position of Transamerica Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teton Convertible and Transamerica Small/mid.
Diversification Opportunities for Teton Convertible and Transamerica Small/mid
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Teton and Transamerica is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Teton Vertible Securities and Transamerica Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Smallmid Cap and Teton Convertible 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 Teton Vertible Securities are associated (or correlated) with Transamerica Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Smallmid Cap has no effect on the direction of Teton Convertible i.e., Teton Convertible and Transamerica Small/mid go up and down completely randomly.
Pair Corralation between Teton Convertible and Transamerica Small/mid
Assuming the 90 days horizon Teton Convertible is expected to generate 1.3 times less return on investment than Transamerica Small/mid. But when comparing it to its historical volatility, Teton Vertible Securities is 1.45 times less risky than Transamerica Small/mid. It trades about 0.07 of its potential returns per unit of risk. Transamerica Smallmid Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,583 in Transamerica Smallmid Cap on August 31, 2024 and sell it today you would earn a total of 551.00 from holding Transamerica Smallmid Cap or generate 21.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Teton Vertible Securities vs. Transamerica Smallmid Cap
Performance |
| Timeline |
| Teton Vertible Securities |
| Transamerica Smallmid Cap |
Teton Convertible and Transamerica Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teton Convertible and Transamerica Small/mid
The main advantage of trading using opposite Teton Convertible and Transamerica Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teton Convertible position performs unexpectedly, Transamerica Small/mid 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 Small/mid will offset losses from the drop in Transamerica Small/mid's long position.| Teton Convertible vs. Meeder Funds | Teton Convertible vs. American Century Investment | Teton Convertible vs. Franklin Government Money | Teton Convertible vs. Ashmore Emerging Markets |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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