Correlation Between Large Cap and Transamerica Small/mid
Can any of the company-specific risk be diversified away by investing in both Large Cap and Transamerica Small/mid 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 Large Cap and Transamerica Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Growth and Transamerica Smallmid Cap, you can compare the effects of market volatilities on Large Cap and Transamerica Small/mid 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 Large Cap with a short position of Transamerica Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Transamerica Small/mid.
Diversification Opportunities for Large Cap and Transamerica Small/mid
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Large and Transamerica is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth and Transamerica Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Smallmid Cap and Large Cap 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 Large Cap Growth are associated (or correlated) with Transamerica Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Smallmid Cap has no effect on the direction of Large Cap i.e., Large Cap and Transamerica Small/mid go up and down completely randomly.
Pair Corralation between Large Cap and Transamerica Small/mid
Assuming the 90 days horizon Large Cap Growth is expected to under-perform the Transamerica Small/mid. In addition to that, Large Cap is 1.45 times more volatile than Transamerica Smallmid Cap. It trades about -0.17 of its total potential returns per unit of risk. Transamerica Smallmid Cap is currently generating about -0.24 per unit of volatility. If you would invest 2,957 in Transamerica Smallmid Cap on August 22, 2025 and sell it today you would lose (112.00) from holding Transamerica Smallmid Cap or give up 3.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Growth vs. Transamerica Smallmid Cap
Performance |
| Timeline |
| Large Cap Growth |
| Transamerica Smallmid Cap |
Large Cap and Transamerica Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Transamerica Small/mid
The main advantage of trading using opposite Large Cap and Transamerica Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Transamerica Small/mid 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 Small/mid will offset losses from the drop in Transamerica Small/mid's long position.| Large Cap vs. One Choice 2045 | Large Cap vs. One Choice 2045 | Large Cap vs. Hennessy Nerstone Mid | Large Cap vs. One Choice 2030 |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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