Correlation Between Transamerica Growth and Cleartrack Ret

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

By analyzing existing cross correlation between Transamerica Growth T and Cleartrack Ret Income, you can compare the effects of market volatilities on Transamerica Growth and Cleartrack Ret 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 Growth with a short position of Cleartrack Ret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Growth and Cleartrack Ret.

Diversification Opportunities for Transamerica Growth and Cleartrack Ret

0.53

Correlation Coefficient

Transamerica Growth  Cleartrack Ret

Very weak diversification

The 3 months correlation between Transamerica and Cleartrack is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Growth T and Cleartrack Ret Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleartrack Ret Income and Transamerica Growth 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 Growth T are associated (or correlated) with Cleartrack Ret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleartrack Ret Income has no effect on the direction of Transamerica Growth i.e., Transamerica Growth and Cleartrack Ret go up and down completely randomly.

Pair Corralation between Transamerica Growth and Cleartrack Ret

Assuming the 90 days horizon Transamerica Growth T is expected to generate 3.16 times more return on investment than Cleartrack Ret. However, Transamerica Growth is 3.16 times more volatile than Cleartrack Ret Income. It trades about 0.18 of its potential returns per unit of risk. Cleartrack Ret Income is currently generating about 0.06 per unit of risk. If you would invest  11,829  in Transamerica Growth T on September 18, 2024 and sell it today you would earn a total of  1,330  from holding Transamerica Growth T or generate 11.24% return on investment over 90 days.

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

Transamerica Growth T  vs.  Cleartrack Ret Income

Transamerica Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Growth T are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Transamerica Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cleartrack Ret Income

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cleartrack Ret Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cleartrack Ret 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 Growth and Cleartrack Ret

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

The idea behind Transamerica Growth T and Cleartrack Ret Income 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.