Correlation Between Transamerica Financial and Nuveen Mid

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

By analyzing existing cross correlation between Transamerica Financial Life and Nuveen Mid Cap, you can compare the effects of market volatilities on Transamerica Financial and Nuveen 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 Transamerica Financial with a short position of Nuveen Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Nuveen Mid.

Diversification Opportunities for Transamerica Financial and Nuveen Mid

0.27

Correlation Coefficient

Transamerica Financial  Nuveen Mid

Modest diversification

The 3 months correlation between Transamerica and Nuveen is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Nuveen Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Mid Cap and Transamerica Financial 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 Transamerica Financial Life are associated (or correlated) with Nuveen Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Mid Cap has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Nuveen Mid go up and down completely randomly.

Pair Corralation between Transamerica Financial and Nuveen Mid

Assuming the 90 days horizon Transamerica Financial Life is expected to under-perform the Nuveen Mid. In addition to that, Transamerica Financial is 1.58 times more volatile than Nuveen Mid Cap. It trades about -0.32 of its total potential returns per unit of risk. Nuveen Mid Cap is currently generating about -0.21 per unit of volatility. If you would invest  2,826  in Nuveen Mid Cap on October 9, 2024 and sell it today you would lose (164.00) from holding Nuveen Mid Cap or give up 5.8% of portfolio value over 90 days.

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

Transamerica Financial Life  vs.  Nuveen Mid Cap

Transamerica Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuveen Mid Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Mid Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Nuveen Mid may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Transamerica Financial and Nuveen Mid

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

The idea behind Transamerica Financial Life and Nuveen Mid Cap 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.