Correlation Between Large Capital and Transamerica Funds

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

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

Diversification Opportunities for Large Capital and Transamerica Funds

0.68

Correlation Coefficient

Large Capital  Transamerica Funds

Poor diversification

The 3 months correlation between LARGE and Transamerica is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Large Capital Growth and Transamerica Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Funds and Large Capital 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 Large Capital Growth are associated (or correlated) with Transamerica Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Funds has no effect on the direction of Large Capital i.e., Large Capital and Transamerica Funds go up and down completely randomly.

Pair Corralation between Large Capital and Transamerica Funds

If you would invest  2,087  in Large Capital Growth on September 4, 2024 and sell it today you would earn a total of  90.00  from holding Large Capital Growth or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Large Capital Growth  vs.  Transamerica Funds

Large Capital Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Large Capital Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Large Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Transamerica Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transamerica Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Large Capital and Transamerica Funds

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

The idea behind Large Capital Growth and Transamerica Funds 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.