Correlation Between Transamerica Funds and Optimum Large

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

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

Diversification Opportunities for Transamerica Funds and Optimum Large

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Correlation Coefficient

Transamerica Funds  Optimum Large

Pay attention - limited upside

The 3 months correlation between Transamerica and Optimum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Funds and Optimum Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Large Cap and Transamerica Funds 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 Funds are associated (or correlated) with Optimum Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Large Cap has no effect on the direction of Transamerica Funds i.e., Transamerica Funds and Optimum Large go up and down completely randomly.

Pair Corralation between Transamerica Funds and Optimum Large

Assuming the 90 days horizon Transamerica Funds is expected to generate 1.55 times less return on investment than Optimum Large. But when comparing it to its historical volatility, Transamerica Funds is 7.62 times less risky than Optimum Large. It trades about 0.12 of its potential returns per unit of risk. Optimum Large Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,753  in Optimum Large Cap on December 2, 2024 and sell it today you would earn a total of  172.00  from holding Optimum Large Cap or generate 9.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	68.69%
Values	Daily Returns

Transamerica Funds   vs.  Optimum Large Cap

Transamerica Funds

Risk-Adjusted Performance

Very Weak

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

Optimum Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optimum Large Cap 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 Transamerica Funds and Optimum Large

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

The idea behind Transamerica Funds and Optimum Large 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.