Correlation Between Transamerica Large and Multifactor Equity
Can any of the company-specific risk be diversified away by investing in both Transamerica Large and Multifactor Equity 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 Multifactor Equity 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 Multifactor Equity Fund, you can compare the effects of market volatilities on Transamerica Large and Multifactor Equity 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 Multifactor Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Large and Multifactor Equity.
Diversification Opportunities for Transamerica Large and Multifactor Equity
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transamerica and Multifactor is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Large Cap and Multifactor Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multifactor Equity 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 Multifactor Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multifactor Equity has no effect on the direction of Transamerica Large i.e., Transamerica Large and Multifactor Equity go up and down completely randomly.
Pair Corralation between Transamerica Large and Multifactor Equity
Assuming the 90 days horizon Transamerica Large Cap is expected to generate 0.99 times more return on investment than Multifactor Equity. However, Transamerica Large Cap is 1.01 times less risky than Multifactor Equity. It trades about 0.27 of its potential returns per unit of risk. Multifactor Equity Fund is currently generating about 0.25 per unit of risk. If you would invest 1,481 in Transamerica Large Cap on May 29, 2025 and sell it today you would earn a total of 156.00 from holding Transamerica Large Cap or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Large Cap vs. Multifactor Equity Fund
Performance |
| Timeline |
| Transamerica Large Cap |
| Multifactor Equity |
Transamerica Large and Multifactor Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Large and Multifactor Equity
The main advantage of trading using opposite Transamerica Large and Multifactor Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Large position performs unexpectedly, Multifactor Equity 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 Multifactor Equity will offset losses from the drop in Multifactor Equity's long position.| Transamerica Large vs. Bbh Intermediate Municipal | Transamerica Large vs. Ab Bond Inflation | Transamerica Large vs. Artisan High Income | Transamerica Large vs. Scout E Bond |
| Multifactor Equity vs. Siit Large Cap | Multifactor Equity vs. Nuveen Large Cap | Multifactor Equity vs. Wasatch Large Cap | Multifactor Equity vs. Transamerica Large Cap |
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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