Correlation Between Transamerica Multi and Transamerica

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

By analyzing existing cross correlation between Transamerica Multi Managed Balanced and Transamerica Growth T, you can compare the effects of market volatilities on Transamerica Multi and Transamerica 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 Multi with a short position of Transamerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Multi and Transamerica.

Diversification Opportunities for Transamerica Multi and Transamerica

0.53

Correlation Coefficient

Transamerica Multi  Transamerica

Very weak diversification

The 3 months correlation between Transamerica and Transamerica is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Multi Managed Bal and Transamerica Growth T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Growth and Transamerica Multi 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 Multi Managed Balanced are associated (or correlated) with Transamerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Growth has no effect on the direction of Transamerica Multi i.e., Transamerica Multi and Transamerica go up and down completely randomly.

Pair Corralation between Transamerica Multi and Transamerica

Assuming the 90 days horizon Transamerica Multi is expected to generate 2.63 times less return on investment than Transamerica. But when comparing it to its historical volatility, Transamerica Multi Managed Balanced is 1.78 times less risky than Transamerica. It trades about 0.06 of its potential returns per unit of risk. Transamerica Growth T is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9,539  in Transamerica Growth T on October 21, 2024 and sell it today you would earn a total of  3,004  from holding Transamerica Growth T or generate 31.49% return on investment over 90 days.

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

Transamerica Multi Managed Bal  vs.  Transamerica Growth T

Transamerica Multi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Transamerica Growth

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Transamerica Multi and Transamerica

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

The idea behind Transamerica Multi Managed Balanced and Transamerica Growth T 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.