Correlation Between Mh Elite and Transamerica Capital

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

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

Diversification Opportunities for Mh Elite and Transamerica Capital

0.5

Correlation Coefficient

Mh Elite  Transamerica Capital

Very weak diversification

The 3 months correlation between MHEFX and Transamerica is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mh Elite Fund and Transamerica Capital Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Capital and Mh Elite 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 Mh Elite Fund are associated (or correlated) with Transamerica Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Capital has no effect on the direction of Mh Elite i.e., Mh Elite and Transamerica Capital go up and down completely randomly.

Pair Corralation between Mh Elite and Transamerica Capital

Assuming the 90 days horizon Mh Elite Fund is expected to under-perform the Transamerica Capital. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mh Elite Fund is 1.34 times less risky than Transamerica Capital. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Transamerica Capital Growth is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,777  in Transamerica Capital Growth on December 22, 2024 and sell it today you would lose (329.00) from holding Transamerica Capital Growth or give up 8.71% of portfolio value over 90 days.

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

Mh Elite Fund  vs.  Transamerica Capital Growth

Mh Elite Fund

Risk-Adjusted Performance

Very Weak

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

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 technical and fundamental 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 Mh Elite and Transamerica Capital

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

The idea behind Mh Elite Fund and Transamerica Capital Growth 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.