Correlation Between Scout Small and Transamerica International
Can any of the company-specific risk be diversified away by investing in both Scout Small and Transamerica International 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 Scout Small and Transamerica International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scout Small Cap and Transamerica International Growth, you can compare the effects of market volatilities on Scout Small and Transamerica International 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 Scout Small with a short position of Transamerica International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scout Small and Transamerica International.
Diversification Opportunities for Scout Small and Transamerica International
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scout and Transamerica is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Scout Small Cap and Transamerica International Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica International and Scout Small 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 Scout Small Cap are associated (or correlated) with Transamerica International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica International has no effect on the direction of Scout Small i.e., Scout Small and Transamerica International go up and down completely randomly.
Pair Corralation between Scout Small and Transamerica International
Assuming the 90 days horizon Scout Small Cap is expected to generate 1.77 times more return on investment than Transamerica International. However, Scout Small is 1.77 times more volatile than Transamerica International Growth. It trades about 0.06 of its potential returns per unit of risk. Transamerica International Growth is currently generating about -0.14 per unit of risk. If you would invest 3,156 in Scout Small Cap on September 25, 2024 and sell it today you would earn a total of 141.00 from holding Scout Small Cap or generate 4.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Scout Small Cap vs. Transamerica International Gro
Performance |
Timeline |
Scout Small Cap |
Transamerica International |
Scout Small and Transamerica International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scout Small and Transamerica International
The main advantage of trading using opposite Scout Small and Transamerica International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scout Small position performs unexpectedly, Transamerica International 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 International will offset losses from the drop in Transamerica International's long position.Scout Small vs. Elfun Government Money | Scout Small vs. Inverse Government Long | Scout Small vs. Dws Government Money | Scout Small vs. Goldman Sachs Government |
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Check out your portfolio center.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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