Correlation Between Transamerica Large and Managed Volatility

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

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

Diversification Opportunities for Transamerica Large and Managed Volatility

-0.48

Correlation Coefficient

Transamerica Large  Managed Volatility

Very good diversification

The 3 months correlation between Transamerica and Managed is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Large Cap and Managed Volatility Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Managed Volatility and Transamerica Large 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 Large Cap are associated (or correlated) with Managed Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Managed Volatility has no effect on the direction of Transamerica Large i.e., Transamerica Large and Managed Volatility go up and down completely randomly.

Pair Corralation between Transamerica Large and Managed Volatility

If you would invest  1,475  in Transamerica Large Cap on October 21, 2024 and sell it today you would earn a total of  26.00  from holding Transamerica Large Cap or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.26%
Values	Daily Returns

Transamerica Large Cap  vs.  Managed Volatility Fund

Transamerica Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Managed Volatility

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Managed Volatility Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Managed Volatility 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 Large and Managed Volatility

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

The idea behind Transamerica Large Cap and Managed Volatility Fund 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .