Correlation Between Dimensional Retirement and Transamerica Cleartrack

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

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

Diversification Opportunities for Dimensional Retirement and Transamerica Cleartrack

0.94

Correlation Coefficient

Dimensional Retirement  Transamerica Cleartrack

Almost no diversification

The 3 months correlation between Dimensional and Transamerica is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Retirement Income and Transamerica Cleartrack Retire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Cleartrack and Dimensional Retirement 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 Dimensional Retirement Income are associated (or correlated) with Transamerica Cleartrack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Cleartrack has no effect on the direction of Dimensional Retirement i.e., Dimensional Retirement and Transamerica Cleartrack go up and down completely randomly.

Pair Corralation between Dimensional Retirement and Transamerica Cleartrack

Assuming the 90 days horizon Dimensional Retirement is expected to generate 1.87 times less return on investment than Transamerica Cleartrack. But when comparing it to its historical volatility, Dimensional Retirement Income is 1.55 times less risky than Transamerica Cleartrack. It trades about 0.08 of its potential returns per unit of risk. Transamerica Cleartrack Retirement is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  823.00  in Transamerica Cleartrack Retirement on September 12, 2024 and sell it today you would earn a total of  16.00  from holding Transamerica Cleartrack Retirement or generate 1.94% return on investment over 90 days.

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

Dimensional Retirement Income  vs.  Transamerica Cleartrack Retire

Dimensional Retirement

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Retirement Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dimensional Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Transamerica Cleartrack

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Cleartrack Retirement are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transamerica Cleartrack is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dimensional Retirement and Transamerica Cleartrack

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

The idea behind Dimensional Retirement Income and Transamerica Cleartrack Retirement 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.