Correlation Between Transamerica Funds and Alliancebernstein

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

By analyzing existing cross correlation between Transamerica Funds and Alliancebernstein National Municipal, you can compare the effects of market volatilities on Transamerica Funds and Alliancebernstein 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 Alliancebernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Funds and Alliancebernstein.

Diversification Opportunities for Transamerica Funds and Alliancebernstein

-0.52

Correlation Coefficient

Transamerica Funds  Alliancebernstein

Excellent diversification

The 3 months correlation between Transamerica and Alliancebernstein is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Funds and Alliancebernstein National Mun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein 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 Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Transamerica Funds i.e., Transamerica Funds and Alliancebernstein go up and down completely randomly.

Pair Corralation between Transamerica Funds and Alliancebernstein

Assuming the 90 days horizon Transamerica Funds is expected to generate 0.2 times more return on investment than Alliancebernstein. However, Transamerica Funds is 4.92 times less risky than Alliancebernstein. It trades about 0.13 of its potential returns per unit of risk. Alliancebernstein National Municipal is currently generating about -0.04 per unit of risk. If you would invest  99.00  in Transamerica Funds on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Transamerica Funds or generate 1.01% return on investment over 90 days.

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

Transamerica Funds   vs.  Alliancebernstein National Mun

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.

Alliancebernstein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliancebernstein National Municipal has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong technical and fundamental indicators, Alliancebernstein is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Transamerica Funds and Alliancebernstein

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

The idea behind Transamerica Funds and Alliancebernstein National Municipal 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.