Correlation Between Transamerica Small and Gurtin California

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

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

Diversification Opportunities for Transamerica Small and Gurtin California

0.4

Correlation Coefficient

Transamerica Small  Gurtin California

Very weak diversification

The 3 months correlation between Transamerica and Gurtin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Small Cap and Gurtin California Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gurtin California Muni and Transamerica Small 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 Small Cap are associated (or correlated) with Gurtin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gurtin California Muni has no effect on the direction of Transamerica Small i.e., Transamerica Small and Gurtin California go up and down completely randomly.

Pair Corralation between Transamerica Small and Gurtin California

Assuming the 90 days horizon Transamerica Small Cap is expected to under-perform the Gurtin California. In addition to that, Transamerica Small is 31.11 times more volatile than Gurtin California Muni. It trades about -0.28 of its total potential returns per unit of risk. Gurtin California Muni is currently generating about -0.38 per unit of volatility. If you would invest  1,010  in Gurtin California Muni on October 10, 2024 and sell it today you would lose (12.00) from holding Gurtin California Muni or give up 1.19% of portfolio value over 90 days.

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

Transamerica Small Cap  vs.  Gurtin California Muni

Transamerica Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Gurtin California Muni

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Transamerica Small Cap and Gurtin California Muni 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 CEOs Directory module to screen CEOs from public companies around the world.