Correlation Between Transamerica Asset and Columbia Disciplined

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

By analyzing existing cross correlation between Transamerica Asset Allocation and Columbia Disciplined E, you can compare the effects of market volatilities on Transamerica Asset and Columbia Disciplined 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 Asset with a short position of Columbia Disciplined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and Columbia Disciplined.

Diversification Opportunities for Transamerica Asset and Columbia Disciplined

-0.01

Correlation Coefficient

Transamerica Asset  Columbia Disciplined

Good diversification

The 3 months correlation between Transamerica and Columbia is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and Columbia Disciplined E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Disciplined and Transamerica Asset 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 Asset Allocation are associated (or correlated) with Columbia Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Disciplined has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and Columbia Disciplined go up and down completely randomly.

Pair Corralation between Transamerica Asset and Columbia Disciplined

Assuming the 90 days horizon Transamerica Asset is expected to generate 3.55 times less return on investment than Columbia Disciplined. In addition to that, Transamerica Asset is 1.1 times more volatile than Columbia Disciplined E. It trades about 0.03 of its total potential returns per unit of risk. Columbia Disciplined E is currently generating about 0.12 per unit of volatility. If you would invest  1,454  in Columbia Disciplined E on October 9, 2024 and sell it today you would earn a total of  247.00  from holding Columbia Disciplined E or generate 16.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.48%
Values	Daily Returns

Transamerica Asset Allocation   vs.  Columbia Disciplined E

Transamerica Asset

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Disciplined

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Columbia Disciplined E has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Columbia Disciplined may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Transamerica Asset and Columbia Disciplined

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

The idea behind Transamerica Asset Allocation and Columbia Disciplined E 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.