Correlation Between Transamerica Large and Ftfa-franklin Templeton

Can any of the company-specific risk be diversified away by investing in both Transamerica Large and Ftfa-franklin Templeton 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 Ftfa-franklin Templeton 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 Ftfa Franklin Templeton Growth, you can compare the effects of market volatilities on Transamerica Large and Ftfa-franklin Templeton 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 Ftfa-franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Large and Ftfa-franklin Templeton.

Diversification Opportunities for Transamerica Large and Ftfa-franklin Templeton

0.91

Correlation Coefficient

Transamerica Large  Ftfa-franklin Templeton

Almost no diversification

The 3 months correlation between TRANSAMERICA and Ftfa-Franklin is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Large Cap and Ftfa Franklin Templeton Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ftfa Franklin Templeton 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 Ftfa-franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ftfa Franklin Templeton has no effect on the direction of Transamerica Large i.e., Transamerica Large and Ftfa-franklin Templeton go up and down completely randomly.

Pair Corralation between Transamerica Large and Ftfa-franklin Templeton

Assuming the 90 days horizon Transamerica Large Cap is expected to generate 1.06 times more return on investment than Ftfa-franklin Templeton. However, Transamerica Large is 1.06 times more volatile than Ftfa Franklin Templeton Growth. It trades about 0.03 of its potential returns per unit of risk. Ftfa Franklin Templeton Growth is currently generating about -0.02 per unit of risk. If you would invest  1,460  in Transamerica Large Cap on December 27, 2024 and sell it today you would earn a total of  16.00  from holding Transamerica Large Cap or generate 1.1% return on investment over 90 days.

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

Transamerica Large Cap  vs.  Ftfa Franklin Templeton Growth

Transamerica Large Cap

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Large Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Ftfa Franklin Templeton

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ftfa Franklin Templeton Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ftfa-franklin Templeton 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 Ftfa-franklin Templeton

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

The idea behind Transamerica Large Cap and Ftfa Franklin Templeton Growth 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.