Correlation Between Transamerica Emerging and Columbia Small

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

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

Diversification Opportunities for Transamerica Emerging and Columbia Small

0.93

Correlation Coefficient

Transamerica Emerging  Columbia Small

Almost no diversification

The 3 months correlation between Transamerica and Columbia is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Columbia Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Small Cap and Transamerica Emerging 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 Emerging Markets are associated (or correlated) with Columbia Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Small Cap has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Columbia Small go up and down completely randomly.

Pair Corralation between Transamerica Emerging and Columbia Small

Assuming the 90 days horizon Transamerica Emerging Markets is expected to generate 1.19 times more return on investment than Columbia Small. However, Transamerica Emerging is 1.19 times more volatile than Columbia Small Cap. It trades about 0.18 of its potential returns per unit of risk. Columbia Small Cap is currently generating about 0.16 per unit of risk. If you would invest  874.00  in Transamerica Emerging Markets on May 6, 2025 and sell it today you would earn a total of  77.00  from holding Transamerica Emerging Markets or generate 8.81% return on investment over 90 days.

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

Transamerica Emerging Markets  vs.  Columbia Small Cap

Transamerica Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Emerging Markets are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Transamerica Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Columbia Small Cap

Risk-Adjusted Performance

Good

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

Pair Trading with Transamerica Emerging and Columbia Small

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

The idea behind Transamerica Emerging Markets and Columbia Small Cap 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.