Correlation Between Transamerica Financial and Mainstay Moderate
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Mainstay Moderate 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 Mainstay Moderate 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 Mainstay Moderate Allocation, you can compare the effects of market volatilities on Transamerica Financial and Mainstay Moderate 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 Mainstay Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Mainstay Moderate.
Diversification Opportunities for Transamerica Financial and Mainstay Moderate
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transamerica and Mainstay is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate 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 Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Mainstay Moderate go up and down completely randomly.
Pair Corralation between Transamerica Financial and Mainstay Moderate
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 1.55 times more return on investment than Mainstay Moderate. However, Transamerica Financial is 1.55 times more volatile than Mainstay Moderate Allocation. It trades about 0.13 of its potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about 0.17 per unit of risk. If you would invest 1,180 in Transamerica Financial Life on September 3, 2024 and sell it today you would earn a total of 67.00 from holding Transamerica Financial Life or generate 5.68% 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. Mainstay Moderate Allocation
Performance |
| Timeline |
| Transamerica Financial |
| Mainstay Moderate |
Transamerica Financial and Mainstay Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Mainstay Moderate
The main advantage of trading using opposite Transamerica Financial and Mainstay Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Mainstay Moderate 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 Mainstay Moderate will offset losses from the drop in Mainstay Moderate's long position.| Transamerica Financial vs. Aig Government Money | Transamerica Financial vs. John Hancock Money | Transamerica Financial vs. First American Funds | Transamerica Financial vs. Matson Money Equity |
| Mainstay Moderate vs. Calamos Dynamic Convertible | Mainstay Moderate vs. Absolute Convertible Arbitrage | Mainstay Moderate vs. Gabelli Convertible And | Mainstay Moderate vs. Lord Abbett Convertible |
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.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |