Correlation Between Transamerica Funds and Nationwide Small

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

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

Diversification Opportunities for Transamerica Funds and Nationwide Small

0.39

Correlation Coefficient

Transamerica Funds  Nationwide Small

Weak diversification

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

Pair Corralation between Transamerica Funds and Nationwide Small

Assuming the 90 days horizon Transamerica Funds is expected to under-perform the Nationwide Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Transamerica Funds is 1.98 times less risky than Nationwide Small. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Nationwide Small Cap is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,213  in Nationwide Small Cap on October 22, 2024 and sell it today you would lose (18.00) from holding Nationwide Small Cap or give up 1.48% of portfolio value over 90 days.

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

Transamerica Funds   vs.  Nationwide Small Cap

Transamerica Funds

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nationwide Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nationwide Small 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 Funds and Nationwide Small

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

The idea behind Transamerica Funds and Nationwide Small 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..