Correlation Between Transamerica Capital and Optimum International
Can any of the company-specific risk be diversified away by investing in both Transamerica Capital and Optimum 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 Transamerica Capital and Optimum International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Capital Growth and Optimum International Fund, you can compare the effects of market volatilities on Transamerica Capital and Optimum 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 Transamerica Capital with a short position of Optimum International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Capital and Optimum International.
Diversification Opportunities for Transamerica Capital and Optimum International
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Transamerica and Optimum is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Capital Growth and Optimum International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum International and Transamerica Capital 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 Capital Growth are associated (or correlated) with Optimum International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum International has no effect on the direction of Transamerica Capital i.e., Transamerica Capital and Optimum International go up and down completely randomly.
Pair Corralation between Transamerica Capital and Optimum International
Assuming the 90 days horizon Transamerica Capital Growth is expected to generate 2.13 times more return on investment than Optimum International. However, Transamerica Capital is 2.13 times more volatile than Optimum International Fund. It trades about 0.1 of its potential returns per unit of risk. Optimum International Fund is currently generating about 0.07 per unit of risk. If you would invest 2,457 in Transamerica Capital Growth on May 1, 2025 and sell it today you would earn a total of 1,875 from holding Transamerica Capital Growth or generate 76.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Capital Growth vs. Optimum International Fund
Performance |
| Timeline |
| Transamerica Capital |
| Optimum International |
Transamerica Capital and Optimum International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Capital and Optimum International
The main advantage of trading using opposite Transamerica Capital and Optimum International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Capital position performs unexpectedly, Optimum 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 Optimum International will offset losses from the drop in Optimum International's long position.| Transamerica Capital vs. Gmo High Yield | Transamerica Capital vs. The National Tax Free | Transamerica Capital vs. Rbc Ultra Short Fixed | Transamerica Capital vs. Barings High Yield |
| Optimum International vs. Optimum Small Mid Cap | Optimum International vs. Optimum Small Mid Cap | Optimum International vs. Ivy Apollo Multi Asset | Optimum International vs. Optimum Fixed Income |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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