Correlation Between Hood River and Transamerica Asset

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

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

Diversification Opportunities for Hood River and Transamerica Asset

0.56

Correlation Coefficient

Hood River  Transamerica Asset

Very weak diversification

The 3 months correlation between Hood and Transamerica is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hood River New and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and Hood River 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 Hood River New 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 Hood River i.e., Hood River and Transamerica Asset go up and down completely randomly.

Pair Corralation between Hood River and Transamerica Asset

Assuming the 90 days horizon Hood River New is expected to under-perform the Transamerica Asset. In addition to that, Hood River is 1.74 times more volatile than Transamerica Asset Allocation. It trades about -0.12 of its total potential returns per unit of risk. Transamerica Asset Allocation is currently generating about -0.1 per unit of volatility. If you would invest  1,370  in Transamerica Asset Allocation on December 30, 2024 and sell it today you would lose (96.00) from holding Transamerica Asset Allocation or give up 7.01% of portfolio value over 90 days.

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

Hood River New  vs.  Transamerica Asset Allocation

Hood River New

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hood River New has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Transamerica Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transamerica Asset Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Hood River and Transamerica Asset

The main advantage of trading using opposite Hood River and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hood River 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 Hood River New 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.