Correlation Between Transamerica Emerging and Thornburg

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

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

Diversification Opportunities for Transamerica Emerging and Thornburg

-0.06

Correlation Coefficient

Transamerica Emerging  Thornburg

Good diversification

The 3 months correlation between Transamerica and Thornburg is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Thornburg E Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg E Growth and Transamerica Emerging 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 Emerging Markets are associated (or correlated) with Thornburg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg E Growth has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Thornburg go up and down completely randomly.

Pair Corralation between Transamerica Emerging and Thornburg

Assuming the 90 days horizon Transamerica Emerging Markets is expected to generate 0.56 times more return on investment than Thornburg. However, Transamerica Emerging Markets is 1.77 times less risky than Thornburg. It trades about 0.01 of its potential returns per unit of risk. Thornburg E Growth is currently generating about -0.01 per unit of risk. If you would invest  818.00  in Transamerica Emerging Markets on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Transamerica Emerging Markets or generate 0.12% return on investment over 90 days.

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

Transamerica Emerging Markets  vs.  Thornburg E Growth

Transamerica Emerging

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Emerging Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Transamerica Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thornburg E Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg E Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Thornburg may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Transamerica Emerging and Thornburg

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

The idea behind Transamerica Emerging Markets and Thornburg E Growth 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.