Correlation Between Transamerica Financial and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Sterling Capital 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 Financial and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Financial Life and Sterling Capital South, you can compare the effects of market volatilities on Transamerica Financial and Sterling Capital 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 Financial with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Sterling Capital.
Diversification Opportunities for Transamerica Financial and Sterling Capital
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transamerica and STERLING is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Sterling Capital South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital South and Transamerica Financial 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 Financial Life are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital South has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Sterling Capital go up and down completely randomly.
Pair Corralation between Transamerica Financial and Sterling Capital
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 3.58 times more return on investment than Sterling Capital. However, Transamerica Financial is 3.58 times more volatile than Sterling Capital South. It trades about 0.34 of its potential returns per unit of risk. Sterling Capital South is currently generating about 0.19 per unit of risk. If you would invest 1,177 in Transamerica Financial Life on August 30, 2024 and sell it today you would earn a total of 67.00 from holding Transamerica Financial Life or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Financial Life vs. Sterling Capital South
Performance |
| Timeline |
| Transamerica Financial |
| Sterling Capital South |
Transamerica Financial and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Sterling Capital
The main advantage of trading using opposite Transamerica Financial and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Transamerica Financial vs. Vanguard Mid Cap Value | Transamerica Financial vs. HUMANA INC | Transamerica Financial vs. Aquagold International | Transamerica Financial vs. Barloworld Ltd ADR |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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