Correlation Between Eic Value and Transamerica Asset

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

By analyzing existing cross correlation between Eic Value Fund and Transamerica Asset Allocation, you can compare the effects of market volatilities on Eic Value 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 Eic Value with a short position of Transamerica Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eic Value and Transamerica Asset.

Diversification Opportunities for Eic Value and Transamerica Asset

0.87

Correlation Coefficient

Eic Value  Transamerica Asset

Very poor diversification

The 3 months correlation between Eic and Transamerica is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and Eic Value 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 Eic Value Fund 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 Eic Value i.e., Eic Value and Transamerica Asset go up and down completely randomly.

Pair Corralation between Eic Value and Transamerica Asset

Assuming the 90 days horizon Eic Value is expected to generate 1.08 times less return on investment than Transamerica Asset. In addition to that, Eic Value is 1.33 times more volatile than Transamerica Asset Allocation. It trades about 0.26 of its total potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.38 per unit of volatility. If you would invest  1,346  in Transamerica Asset Allocation on September 5, 2024 and sell it today you would earn a total of  54.00  from holding Transamerica Asset Allocation or generate 4.01% return on investment over 90 days.

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

Eic Value Fund  vs.  Transamerica Asset Allocation

Eic Value Fund

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eic Value Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Eic Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Transamerica Asset

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Asset Allocation are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transamerica Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eic Value and Transamerica Asset

The main advantage of trading using opposite Eic Value and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eic Value 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 Eic Value Fund 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.