Correlation Between Transamerica Capital and Cornerstone Aggressive

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

Diversification Opportunities for Transamerica Capital and Cornerstone Aggressive

-0.41

Correlation Coefficient

Transamerica Capital  Cornerstone Aggressive

Very good diversification

The 3 months correlation between Transamerica and Cornerstone is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Capital Growth and Cornerstone Aggressive Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Aggressive 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 Cornerstone Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Aggressive has no effect on the direction of Transamerica Capital i.e., Transamerica Capital and Cornerstone Aggressive go up and down completely randomly.

Pair Corralation between Transamerica Capital and Cornerstone Aggressive

Assuming the 90 days horizon Transamerica Capital Growth is expected to generate 1.8 times more return on investment than Cornerstone Aggressive. However, Transamerica Capital is 1.8 times more volatile than Cornerstone Aggressive Fund. It trades about 0.22 of its potential returns per unit of risk. Cornerstone Aggressive Fund is currently generating about -0.15 per unit of risk. If you would invest  2,945  in Transamerica Capital Growth on October 9, 2024 and sell it today you would earn a total of  824.00  from holding Transamerica Capital Growth or generate 27.98% return on investment over 90 days.

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

Transamerica Capital Growth  vs.  Cornerstone Aggressive Fund

Transamerica Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Capital Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Transamerica Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Cornerstone Aggressive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cornerstone Aggressive 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.

Pair Trading with Transamerica Capital and Cornerstone Aggressive

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

The idea behind Transamerica Capital Growth and Cornerstone Aggressive Fund 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.