Correlation Between Transamerica Funds and Chestnut Street

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

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

Diversification Opportunities for Transamerica Funds and Chestnut Street

0.72

Correlation Coefficient

Transamerica Funds  Chestnut Street

Poor diversification

The 3 months correlation between Transamerica and Chestnut is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Funds and Chestnut Street Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chestnut Street Exchange and Transamerica Funds 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 Funds are associated (or correlated) with Chestnut Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chestnut Street Exchange has no effect on the direction of Transamerica Funds i.e., Transamerica Funds and Chestnut Street go up and down completely randomly.

Pair Corralation between Transamerica Funds and Chestnut Street

If you would invest  112,597  in Chestnut Street Exchange on August 31, 2024 and sell it today you would earn a total of  5,832  from holding Chestnut Street Exchange or generate 5.18% return on investment over 90 days.

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

Transamerica Funds   vs.  Chestnut Street Exchange

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.

Chestnut Street Exchange

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chestnut Street Exchange are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Chestnut Street may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Transamerica Funds and Chestnut Street

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

The idea behind Transamerica Funds and Chestnut Street Exchange 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.