Correlation Between Transamerica Financial and Bts Managed
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Bts Managed 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 Bts Managed 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 Bts Managed Income, you can compare the effects of market volatilities on Transamerica Financial and Bts Managed 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 Bts Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Bts Managed.
Diversification Opportunities for Transamerica Financial and Bts Managed
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Transamerica and Bts is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Bts Managed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bts Managed Income 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 Bts Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bts Managed Income has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Bts Managed go up and down completely randomly.
Pair Corralation between Transamerica Financial and Bts Managed
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 3.05 times more return on investment than Bts Managed. However, Transamerica Financial is 3.05 times more volatile than Bts Managed Income. It trades about 0.07 of its potential returns per unit of risk. Bts Managed Income is currently generating about 0.12 per unit of risk. If you would invest 1,066 in Transamerica Financial Life on September 12, 2024 and sell it today you would earn a total of 149.00 from holding Transamerica Financial Life or generate 13.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Financial Life vs. Bts Managed Income
Performance |
| Timeline |
| Transamerica Financial |
| Bts Managed Income |
Transamerica Financial and Bts Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Bts Managed
The main advantage of trading using opposite Transamerica Financial and Bts Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Bts Managed 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 Bts Managed will offset losses from the drop in Bts Managed's long position.| Transamerica Financial vs. SCOR PK | Transamerica Financial vs. Morningstar Unconstrained Allocation | Transamerica Financial vs. Thrivent High Yield | Transamerica Financial vs. Via Renewables |
| Bts Managed vs. Transamerica Financial Life | Bts Managed vs. Blackrock Financial Institutions | Bts Managed vs. Angel Oak Financial | Bts Managed vs. John Hancock Financial |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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