Correlation Between Transamerica Intermediate and Ubs Total

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

By analyzing existing cross correlation between Transamerica Intermediate Muni and Ubs Total Return, you can compare the effects of market volatilities on Transamerica Intermediate and Ubs Total 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 Intermediate with a short position of Ubs Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Ubs Total.

Diversification Opportunities for Transamerica Intermediate and Ubs Total

0.82

Correlation Coefficient

Transamerica Intermediate  Ubs Total

Very poor diversification

The 3 months correlation between Transamerica and UBS is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Ubs Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Total Return and Transamerica Intermediate 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 Intermediate Muni are associated (or correlated) with Ubs Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Total Return has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Ubs Total go up and down completely randomly.

Pair Corralation between Transamerica Intermediate and Ubs Total

Assuming the 90 days horizon Transamerica Intermediate is expected to generate 1.59 times less return on investment than Ubs Total. In addition to that, Transamerica Intermediate is 1.1 times more volatile than Ubs Total Return. It trades about 0.09 of its total potential returns per unit of risk. Ubs Total Return is currently generating about 0.16 per unit of volatility. If you would invest  1,324  in Ubs Total Return on October 24, 2024 and sell it today you would earn a total of  8.00  from holding Ubs Total Return or generate 0.6% return on investment over 90 days.

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

Transamerica Intermediate Muni  vs.  Ubs Total Return

Transamerica Intermediate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Intermediate Muni are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transamerica Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ubs Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubs Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ubs Total 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 Intermediate and Ubs Total

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

The idea behind Transamerica Intermediate Muni and Ubs Total Return 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.