Correlation Between Transamerica Financial and Fundvantage Trust
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Fundvantage Trust 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 Financial and Fundvantage Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Financial Life and Fundvantage Trust , you can compare the effects of market volatilities on Transamerica Financial and Fundvantage Trust 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 Financial with a short position of Fundvantage Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Fundvantage Trust.
Diversification Opportunities for Transamerica Financial and Fundvantage Trust
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transamerica and Fundvantage is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Fundvantage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundvantage Trust and Transamerica Financial 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 Financial Life are associated (or correlated) with Fundvantage Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundvantage Trust has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Fundvantage Trust go up and down completely randomly.
Pair Corralation between Transamerica Financial and Fundvantage Trust
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 4.19 times more return on investment than Fundvantage Trust. However, Transamerica Financial is 4.19 times more volatile than Fundvantage Trust . It trades about 0.16 of its potential returns per unit of risk. Fundvantage Trust is currently generating about 0.1 per unit of risk. If you would invest 1,158 in Transamerica Financial Life on September 6, 2024 and sell it today you would earn a total of 76.00 from holding Transamerica Financial Life or generate 6.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.44% |
Values | Daily Returns |
Transamerica Financial Life vs. Fundvantage Trust
Performance |
Timeline |
Transamerica Financial |
Fundvantage Trust |
Transamerica Financial and Fundvantage Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Transamerica Financial and Fundvantage Trust
The main advantage of trading using opposite Transamerica Financial and Fundvantage Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Fundvantage Trust 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 Fundvantage Trust will offset losses from the drop in Fundvantage Trust's long position.The idea behind Transamerica Financial Life and Fundvantage Trust 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.
Fundvantage Trust vs. Abr 7525 Volatility | Fundvantage Trust vs. Red Oak Technology | Fundvantage Trust vs. Qs Large Cap | Fundvantage Trust vs. Arrow Managed Futures |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
Commodity Directory Find actively traded commodities issued by global exchanges | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |