Correlation Between Transamerica Capital and Global Advantage

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

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

Diversification Opportunities for Transamerica Capital and Global Advantage

1.0

Correlation Coefficient

Transamerica Capital  Global Advantage

No risk reduction

The 3 months correlation between Transamerica and Global is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Capital Growth and Global Advantage Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Advantage Por and Transamerica Capital 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 Capital Growth are associated (or correlated) with Global Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Advantage Por has no effect on the direction of Transamerica Capital i.e., Transamerica Capital and Global Advantage go up and down completely randomly.

Pair Corralation between Transamerica Capital and Global Advantage

Assuming the 90 days horizon Transamerica Capital Growth is expected to under-perform the Global Advantage. But the mutual fund apears to be less risky and, when comparing its historical volatility, Transamerica Capital Growth is 1.05 times less risky than Global Advantage. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Global Advantage Portfolio is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,482  in Global Advantage Portfolio on December 24, 2024 and sell it today you would lose (140.00) from holding Global Advantage Portfolio or give up 9.45% of portfolio value over 90 days.

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

Transamerica Capital Growth  vs.  Global Advantage Portfolio

Transamerica Capital

Risk-Adjusted Performance

Very Weak

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

Global Advantage Por

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Advantage Portfolio 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 Capital and Global Advantage

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

The idea behind Transamerica Capital Growth and Global Advantage Portfolio 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.