Correlation Between Transamerica Financial and Voya Large
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Voya Large 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 Voya Large 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 Voya Large Cap, you can compare the effects of market volatilities on Transamerica Financial and Voya Large 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 Voya Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Voya Large.
Diversification Opportunities for Transamerica Financial and Voya Large
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transamerica and Voya is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Voya Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Large Cap 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 Voya Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Large Cap has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Voya Large go up and down completely randomly.
Pair Corralation between Transamerica Financial and Voya Large
Assuming the 90 days horizon Transamerica Financial is expected to generate 1.11 times less return on investment than Voya Large. But when comparing it to its historical volatility, Transamerica Financial Life is 1.02 times less risky than Voya Large. It trades about 0.32 of its potential returns per unit of risk. Voya Large Cap is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 649.00 in Voya Large Cap on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Voya Large Cap or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Financial Life vs. Voya Large Cap
Performance |
| Timeline |
| Transamerica Financial |
| Voya Large Cap |
Transamerica Financial and Voya Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Voya Large
The main advantage of trading using opposite Transamerica Financial and Voya Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Voya Large 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 Voya Large will offset losses from the drop in Voya Large's long position.The idea behind Transamerica Financial Life and Voya Large 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.
| Voya Large vs. Nuveen Minnesota Municipal | Voya Large vs. Oklahoma Municipal Fund | Voya Large vs. Transamerica Funds | Voya Large vs. Ishares Municipal Bond |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |