Correlation Between Transamerica Capital and Pacific Funds

Can any of the company-specific risk be diversified away by investing in both Transamerica Capital and Pacific Funds 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 Pacific Funds 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 Pacific Funds Esg, you can compare the effects of market volatilities on Transamerica Capital and Pacific Funds 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 Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Capital and Pacific Funds.

Diversification Opportunities for Transamerica Capital and Pacific Funds

-0.39

Correlation Coefficient

Transamerica Capital  Pacific Funds

Very good diversification

The 3 months correlation between Transamerica and Pacific is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Capital Growth and Pacific Funds Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Esg 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Esg has no effect on the direction of Transamerica Capital i.e., Transamerica Capital and Pacific Funds go up and down completely randomly.

Pair Corralation between Transamerica Capital and Pacific Funds

Assuming the 90 days horizon Transamerica Capital Growth is expected to under-perform the Pacific Funds. In addition to that, Transamerica Capital is 8.03 times more volatile than Pacific Funds Esg. It trades about -0.07 of its total potential returns per unit of risk. Pacific Funds Esg is currently generating about 0.16 per unit of volatility. If you would invest  850.00  in Pacific Funds Esg on December 24, 2024 and sell it today you would earn a total of  21.00  from holding Pacific Funds Esg or generate 2.47% return on investment over 90 days.

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

Transamerica Capital Growth  vs.  Pacific Funds Esg

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.

Pacific Funds Esg

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Funds Esg are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Pacific Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Transamerica Capital and Pacific Funds

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

The idea behind Transamerica Capital Growth and Pacific Funds Esg 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.