Correlation Between Transamerica International and Avantis International

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

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

Diversification Opportunities for Transamerica International and Avantis International

0.88

Correlation Coefficient

Transamerica International  Avantis International

Very poor diversification

The 3 months correlation between Transamerica and Avantis is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica International Sma and Avantis International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and Transamerica International 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 International Small are associated (or correlated) with Avantis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis International has no effect on the direction of Transamerica International i.e., Transamerica International and Avantis International go up and down completely randomly.

Pair Corralation between Transamerica International and Avantis International

Assuming the 90 days horizon Transamerica International Small is expected to under-perform the Avantis International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Transamerica International Small is 1.15 times less risky than Avantis International. The mutual fund trades about -0.23 of its potential returns per unit of risk. The Avantis International Small is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,229  in Avantis International Small on January 20, 2024 and sell it today you would lose (20.00) from holding Avantis International Small or give up 1.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Transamerica International Sma  vs.  Avantis International Small

Transamerica International

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica International Small are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transamerica International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Avantis International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis International Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Avantis International 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 International and Avantis International

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

The idea behind Transamerica International Small and Avantis International Small 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..