Correlation Between Chartwell Short and Transamerica Short-term

Can any of the company-specific risk be diversified away by investing in both Chartwell Short and Transamerica Short-term 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 Chartwell Short and Transamerica Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chartwell Short Duration and Transamerica Short Term Bond, you can compare the effects of market volatilities on Chartwell Short and Transamerica Short-term 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 Chartwell Short with a short position of Transamerica Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chartwell Short and Transamerica Short-term.

Diversification Opportunities for Chartwell Short and Transamerica Short-term

0.4

Correlation Coefficient

Chartwell Short  Transamerica Short-term

Very weak diversification

The 3 months correlation between Chartwell and Transamerica is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chartwell Short Duration and Transamerica Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Short Term and Chartwell Short 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 Chartwell Short Duration are associated (or correlated) with Transamerica Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Short Term has no effect on the direction of Chartwell Short i.e., Chartwell Short and Transamerica Short-term go up and down completely randomly.

Pair Corralation between Chartwell Short and Transamerica Short-term

Assuming the 90 days horizon Chartwell Short Duration is expected to generate 0.83 times more return on investment than Transamerica Short-term. However, Chartwell Short Duration is 1.2 times less risky than Transamerica Short-term. It trades about 0.18 of its potential returns per unit of risk. Transamerica Short Term Bond is currently generating about 0.13 per unit of risk. If you would invest  904.00  in Chartwell Short Duration on October 9, 2024 and sell it today you would earn a total of  45.00  from holding Chartwell Short Duration or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Chartwell Short Duration  vs.  Transamerica Short Term Bond

Chartwell Short Duration

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Short Duration are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Chartwell Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Transamerica Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica Short Term Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Transamerica Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chartwell Short and Transamerica Short-term

The main advantage of trading using opposite Chartwell Short and Transamerica Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chartwell Short position performs unexpectedly, Transamerica Short-term 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 Short-term will offset losses from the drop in Transamerica Short-term's long position.

The idea behind Chartwell Short Duration and Transamerica Short Term Bond 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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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.