Correlation Between Transamerica Asset and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Transamerica Asset and Sterling Capital 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 Asset and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Asset Allocation and Sterling Capital Porate, you can compare the effects of market volatilities on Transamerica Asset and Sterling Capital 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 Asset with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and Sterling Capital.
Diversification Opportunities for Transamerica Asset and Sterling Capital
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transamerica and Sterling is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and Sterling Capital Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Porate and Transamerica Asset 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 Asset Allocation are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Porate has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and Sterling Capital go up and down completely randomly.
Pair Corralation between Transamerica Asset and Sterling Capital
Assuming the 90 days horizon Transamerica Asset Allocation is expected to generate 0.67 times more return on investment than Sterling Capital. However, Transamerica Asset Allocation is 1.49 times less risky than Sterling Capital. It trades about 0.21 of its potential returns per unit of risk. Sterling Capital Porate is currently generating about 0.12 per unit of risk. If you would invest 1,380 in Transamerica Asset Allocation on September 13, 2024 and sell it today you would earn a total of 23.00 from holding Transamerica Asset Allocation or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Transamerica Asset Allocation vs. Sterling Capital Porate
Performance |
| Timeline |
| Transamerica Asset |
| Sterling Capital Porate |
Transamerica Asset and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Asset and Sterling Capital
The main advantage of trading using opposite Transamerica Asset and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Asset position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.The idea behind Transamerica Asset Allocation and Sterling Capital Porate 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.
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
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.
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