Correlation Between Transamerica Intermediate and Rising Dollar

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

By analyzing existing cross correlation between Transamerica Intermediate Muni and Rising Dollar Profund, you can compare the effects of market volatilities on Transamerica Intermediate and Rising Dollar 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 Intermediate with a short position of Rising Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Rising Dollar.

Diversification Opportunities for Transamerica Intermediate and Rising Dollar

-0.14

Correlation Coefficient

Transamerica Intermediate  Rising Dollar

Good diversification

The 3 months correlation between Transamerica and Rising is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Rising Dollar Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Dollar Profund and Transamerica Intermediate 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 Intermediate Muni are associated (or correlated) with Rising Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Dollar Profund has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Rising Dollar go up and down completely randomly.

Pair Corralation between Transamerica Intermediate and Rising Dollar

Assuming the 90 days horizon Transamerica Intermediate Muni is expected to under-perform the Rising Dollar. But the mutual fund apears to be less risky and, when comparing its historical volatility, Transamerica Intermediate Muni is 1.47 times less risky than Rising Dollar. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Rising Dollar Profund is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,970  in Rising Dollar Profund on September 21, 2024 and sell it today you would earn a total of  247.00  from holding Rising Dollar Profund or generate 8.32% return on investment over 90 days.

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

Transamerica Intermediate Muni  vs.  Rising Dollar Profund

Transamerica Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica Intermediate Muni has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Transamerica Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rising Dollar Profund

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rising Dollar Profund are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Rising Dollar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Transamerica Intermediate and Rising Dollar

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

The idea behind Transamerica Intermediate Muni and Rising Dollar Profund 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.