Correlation Between Pace Small/medium and Transamerica Emerging

Can any of the company-specific risk be diversified away by investing in both Pace Small/medium and Transamerica Emerging 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 Pace Small/medium and Transamerica Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pace Smallmedium Value and Transamerica Emerging Markets, you can compare the effects of market volatilities on Pace Small/medium and Transamerica Emerging 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 Pace Small/medium with a short position of Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Small/medium and Transamerica Emerging.

Diversification Opportunities for Pace Small/medium and Transamerica Emerging

-0.1

Correlation Coefficient

Pace Small/medium  Transamerica Emerging

Good diversification

The 3 months correlation between Pace and Transamerica is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging and Pace Small/medium 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 Pace Smallmedium Value are associated (or correlated) with Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Pace Small/medium i.e., Pace Small/medium and Transamerica Emerging go up and down completely randomly.

Pair Corralation between Pace Small/medium and Transamerica Emerging

Assuming the 90 days horizon Pace Smallmedium Value is expected to generate 4.59 times more return on investment than Transamerica Emerging. However, Pace Small/medium is 4.59 times more volatile than Transamerica Emerging Markets. It trades about 0.18 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest  1,957  in Pace Smallmedium Value on September 5, 2024 and sell it today you would earn a total of  239.00  from holding Pace Smallmedium Value or generate 12.21% return on investment over 90 days.

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

Pace Smallmedium Value  vs.  Transamerica Emerging Markets

Pace Smallmedium Value

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Smallmedium Value are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Small/medium may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Transamerica Emerging

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Emerging Markets 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 Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pace Small/medium and Transamerica Emerging

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

The idea behind Pace Smallmedium Value and Transamerica Emerging Markets 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.