Correlation Between Smallcap Fund and Transamerica International

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

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

Diversification Opportunities for Smallcap Fund and Transamerica International

0.91

Correlation Coefficient

Smallcap Fund  Transamerica International

Almost no diversification

The 3 months correlation between Smallcap and Transamerica is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Transamerica International Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica International and Smallcap Fund 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 Smallcap Fund Fka 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 Smallcap Fund i.e., Smallcap Fund and Transamerica International go up and down completely randomly.

Pair Corralation between Smallcap Fund and Transamerica International

Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 1.51 times more return on investment than Transamerica International. However, Smallcap Fund is 1.51 times more volatile than Transamerica International Small. It trades about 0.16 of its potential returns per unit of risk. Transamerica International Small is currently generating about 0.16 per unit of risk. If you would invest  2,368  in Smallcap Fund Fka on May 4, 2025 and sell it today you would earn a total of  232.00  from holding Smallcap Fund Fka or generate 9.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Smallcap Fund Fka  vs.  Transamerica International Sma

Smallcap Fund Fka

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Fund Fka are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Smallcap Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Transamerica International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica International Small are ranked lower than 12 (%) 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.

Pair Trading with Smallcap Fund and Transamerica International

The main advantage of trading using opposite Smallcap Fund and Transamerica International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund 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.

The idea behind Smallcap Fund Fka and Transamerica 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.