Correlation Between Transamerica Financial and Amg Managers
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Amg Managers 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 Amg Managers 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 Amg Managers Centersquare, you can compare the effects of market volatilities on Transamerica Financial and Amg Managers 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 Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Amg Managers.
Diversification Opportunities for Transamerica Financial and Amg Managers
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transamerica and Amg is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Amg Managers Centersquare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Centersquare 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 Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Centersquare has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Amg Managers go up and down completely randomly.
Pair Corralation between Transamerica Financial and Amg Managers
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 0.83 times more return on investment than Amg Managers. However, Transamerica Financial Life is 1.21 times less risky than Amg Managers. It trades about 0.02 of its potential returns per unit of risk. Amg Managers Centersquare is currently generating about -0.02 per unit of risk. If you would invest 1,209 in Transamerica Financial Life on September 14, 2024 and sell it today you would earn a total of 3.00 from holding Transamerica Financial Life or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Financial Life vs. Amg Managers Centersquare
Performance |
| Timeline |
| Transamerica Financial |
| Amg Managers Centersquare |
Transamerica Financial and Amg Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Amg Managers
The main advantage of trading using opposite Transamerica Financial and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Amg Managers 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 Amg Managers will offset losses from the drop in Amg Managers' long position.The idea behind Transamerica Financial Life and Amg Managers Centersquare 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.
| Amg Managers vs. Transamerica Financial Life | Amg Managers vs. Fidelity Advisor Financial | Amg Managers vs. Icon Financial Fund | Amg Managers vs. Blackrock Financial Institutions |
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 Stocks Directory module to find actively traded stocks across global markets.
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