Correlation Between Transamerica Large and Allianzgi Health

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

By analyzing existing cross correlation between Transamerica Large Cap and Allianzgi Health Sciences, you can compare the effects of market volatilities on Transamerica Large and Allianzgi Health 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 Large with a short position of Allianzgi Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Large and Allianzgi Health.

Diversification Opportunities for Transamerica Large and Allianzgi Health

-0.63

Correlation Coefficient

Transamerica Large  Allianzgi Health

Excellent diversification

The 3 months correlation between Transamerica and Allianzgi is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Large Cap and Allianzgi Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Health Sciences and Transamerica Large 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 Large Cap are associated (or correlated) with Allianzgi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Health Sciences has no effect on the direction of Transamerica Large i.e., Transamerica Large and Allianzgi Health go up and down completely randomly.

Pair Corralation between Transamerica Large and Allianzgi Health

Assuming the 90 days horizon Transamerica Large Cap is expected to under-perform the Allianzgi Health. But the mutual fund apears to be less risky and, when comparing its historical volatility, Transamerica Large Cap is 2.09 times less risky than Allianzgi Health. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Allianzgi Health Sciences is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  2,970  in Allianzgi Health Sciences on September 12, 2024 and sell it today you would lose (63.00) from holding Allianzgi Health Sciences or give up 2.12% of portfolio value over 90 days.

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

Transamerica Large Cap  vs.  Allianzgi Health Sciences

Transamerica Large Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Large Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Transamerica Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allianzgi Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Transamerica Large and Allianzgi Health

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

The idea behind Transamerica Large Cap and Allianzgi Health Sciences 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.