Correlation Between Mutual Of and Transamerica Large

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

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

Diversification Opportunities for Mutual Of and Transamerica Large

0.78

Correlation Coefficient

Mutual Of  Transamerica Large

Poor diversification

The 3 months correlation between Mutual and Transamerica is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and Transamerica Large Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Value and Mutual Of 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 Mutual Of America 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 Value has no effect on the direction of Mutual Of i.e., Mutual Of and Transamerica Large go up and down completely randomly.

Pair Corralation between Mutual Of and Transamerica Large

Assuming the 90 days horizon Mutual Of America is expected to generate 0.78 times more return on investment than Transamerica Large. However, Mutual Of America is 1.28 times less risky than Transamerica Large. It trades about 0.0 of its potential returns per unit of risk. Transamerica Large Value is currently generating about -0.05 per unit of risk. If you would invest  1,491  in Mutual Of America on October 21, 2024 and sell it today you would lose (13.00) from holding Mutual Of America or give up 0.87% of portfolio value over 90 days.

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

Mutual Of America  vs.  Transamerica Large Value

Mutual Of America

Risk-Adjusted Performance

0 of 100

Very Weak

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

Transamerica Large Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica Large Value 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 Mutual Of and Transamerica Large

The main advantage of trading using opposite Mutual Of and Transamerica Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of 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 Mutual Of America and Transamerica Large Value 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.