Correlation Between Transamerica Financial and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Old Westbury 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 Old Westbury 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 Old Westbury Municipal, you can compare the effects of market volatilities on Transamerica Financial and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Old Westbury.
Diversification Opportunities for Transamerica Financial and Old Westbury
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Old is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Old Westbury Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Municipal 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Municipal has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Old Westbury go up and down completely randomly.
Pair Corralation between Transamerica Financial and Old Westbury
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 5.24 times more return on investment than Old Westbury. However, Transamerica Financial is 5.24 times more volatile than Old Westbury Municipal. It trades about 0.01 of its potential returns per unit of risk. Old Westbury Municipal is currently generating about 0.03 per unit of risk. If you would invest 1,084 in Transamerica Financial Life on October 28, 2024 and sell it today you would earn a total of 15.00 from holding Transamerica Financial Life or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Financial Life vs. Old Westbury Municipal
Performance |
| Timeline |
| Transamerica Financial |
| Old Westbury Municipal |
Transamerica Financial and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Old Westbury
The main advantage of trading using opposite Transamerica Financial and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.The idea behind Transamerica Financial Life and Old Westbury Municipal 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.
| Old Westbury vs. International Investors Gold | Old Westbury vs. Goldman Sachs Strategic | Old Westbury vs. Wells Fargo Advantage | Old Westbury vs. Deutsche Gold Precious |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |