Correlation Between Large-cap Growth and Transamerica Large

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

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

Diversification Opportunities for Large-cap Growth and Transamerica Large

-0.33

Correlation Coefficient

Large-cap Growth  Transamerica Large

Very good diversification

The 3 months correlation between LARGE-CAP and Transamerica is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Transamerica Large Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Core and Large-cap Growth 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 Large Cap Growth Profund are associated (or correlated) with Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Core has no effect on the direction of Large-cap Growth i.e., Large-cap Growth and Transamerica Large go up and down completely randomly.

Pair Corralation between Large-cap Growth and Transamerica Large

Assuming the 90 days horizon Large Cap Growth Profund is expected to under-perform the Transamerica Large. In addition to that, Large-cap Growth is 1.45 times more volatile than Transamerica Large Core. It trades about -0.02 of its total potential returns per unit of risk. Transamerica Large Core is currently generating about 0.11 per unit of volatility. If you would invest  1,134  in Transamerica Large Core on October 25, 2024 and sell it today you would earn a total of  18.00  from holding Transamerica Large Core or generate 1.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Large Cap Growth Profund  vs.  Transamerica Large Core

Large Cap Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth Profund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Large-cap Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Transamerica Large Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica Large Core 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 basic 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.

Pair Trading with Large-cap Growth and Transamerica Large

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

The idea behind Large Cap Growth Profund and Transamerica Large Core 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.