Correlation Between Transamerica Emerging and Alger Large

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

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

Diversification Opportunities for Transamerica Emerging and Alger Large

-0.42

Correlation Coefficient

Transamerica Emerging  Alger Large

Very good diversification

The 3 months correlation between Transamerica and Alger is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Alger Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Large Cap and Transamerica Emerging 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 Emerging Markets are associated (or correlated) with Alger Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Large Cap has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Alger Large go up and down completely randomly.

Pair Corralation between Transamerica Emerging and Alger Large

Assuming the 90 days horizon Transamerica Emerging Markets is expected to generate 0.53 times more return on investment than Alger Large. However, Transamerica Emerging Markets is 1.9 times less risky than Alger Large. It trades about 0.11 of its potential returns per unit of risk. Alger Large Cap is currently generating about -0.09 per unit of risk. If you would invest  793.00  in Transamerica Emerging Markets on December 31, 2024 and sell it today you would earn a total of  55.00  from holding Transamerica Emerging Markets or generate 6.94% return on investment over 90 days.

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

Transamerica Emerging Markets  vs.  Alger Large Cap

Transamerica Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Emerging Markets are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Transamerica Emerging may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Alger Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Emerging and Alger Large

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

The idea behind Transamerica Emerging Markets and Alger Large Cap 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.