Correlation Between International Investors and Transamerica Small/mid

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Can any of the company-specific risk be diversified away by investing in both International Investors and Transamerica Small/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 International Investors and Transamerica Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Investors Gold and Transamerica Smallmid Cap, you can compare the effects of market volatilities on International Investors and Transamerica Small/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 International Investors with a short position of Transamerica Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and Transamerica Small/mid.

Diversification Opportunities for International Investors and Transamerica Small/mid

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between International and Transamerica is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Transamerica Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Smallmid Cap and International Investors 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 International Investors Gold are associated (or correlated) with Transamerica Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Smallmid Cap has no effect on the direction of International Investors i.e., International Investors and Transamerica Small/mid go up and down completely randomly.

Pair Corralation between International Investors and Transamerica Small/mid

Assuming the 90 days horizon International Investors Gold is expected to generate 1.21 times more return on investment than Transamerica Small/mid. However, International Investors is 1.21 times more volatile than Transamerica Smallmid Cap. It trades about -0.21 of its potential returns per unit of risk. Transamerica Smallmid Cap is currently generating about -0.33 per unit of risk. If you would invest  993.00  in International Investors Gold on October 10, 2024 and sell it today you would lose (128.00) from holding International Investors Gold or give up 12.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

International Investors Gold  vs.  Transamerica Smallmid Cap

 Performance 
       Timeline  
International Investors 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days International Investors Gold 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 fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.
Transamerica Smallmid Cap 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Transamerica Smallmid 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.

International Investors and Transamerica Small/mid Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with International Investors and Transamerica Small/mid

The main advantage of trading using opposite International Investors and Transamerica Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors position performs unexpectedly, Transamerica Small/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 Transamerica Small/mid will offset losses from the drop in Transamerica Small/mid's long position.
The idea behind International Investors Gold and Transamerica Smallmid 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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