Correlation Between Transamerica Financial and Angel Oak
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Angel Oak 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 Angel Oak 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 Angel Oak Financial, you can compare the effects of market volatilities on Transamerica Financial and Angel Oak 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 Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Angel Oak.
Diversification Opportunities for Transamerica Financial and Angel Oak
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Transamerica and Angel is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Angel Oak Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Financial 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 Angel Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel Oak Financial has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Angel Oak go up and down completely randomly.
Pair Corralation between Transamerica Financial and Angel Oak
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 3.86 times more return on investment than Angel Oak. However, Transamerica Financial is 3.86 times more volatile than Angel Oak Financial. It trades about 0.17 of its potential returns per unit of risk. Angel Oak Financial is currently generating about 0.0 per unit of risk. If you would invest 1,186 in Transamerica Financial Life on August 24, 2024 and sell it today you would earn a total of 33.00 from holding Transamerica Financial Life or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Transamerica Financial Life vs. Angel Oak Financial
Performance |
| Timeline |
| Transamerica Financial |
| Angel Oak Financial |
Transamerica Financial and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Angel Oak
The main advantage of trading using opposite Transamerica Financial and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Angel Oak 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 Angel Oak will offset losses from the drop in Angel Oak's long position.The idea behind Transamerica Financial Life and Angel Oak Financial 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.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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