Correlation Between Transamerica Asset and The Hartford
Can any of the company-specific risk be diversified away by investing in both Transamerica Asset and The Hartford 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 The Hartford 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 The Hartford Equity, you can compare the effects of market volatilities on Transamerica Asset and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Asset and The Hartford.
Diversification Opportunities for Transamerica Asset and The Hartford
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transamerica and The is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Asset Allocation and The Hartford Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Equity 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Equity has no effect on the direction of Transamerica Asset i.e., Transamerica Asset and The Hartford go up and down completely randomly.
Pair Corralation between Transamerica Asset and The Hartford
Assuming the 90 days horizon Transamerica Asset is expected to generate 1.07 times less return on investment than The Hartford. But when comparing it to its historical volatility, Transamerica Asset Allocation is 1.61 times less risky than The Hartford. It trades about 0.17 of its potential returns per unit of risk. The Hartford Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,240 in The Hartford Equity on August 28, 2024 and sell it today you would earn a total of 37.00 from holding The Hartford Equity or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Transamerica Asset Allocation vs. The Hartford Equity
Performance |
| Timeline |
| Transamerica Asset |
| Hartford Equity |
Transamerica Asset and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Asset and The Hartford
The main advantage of trading using opposite Transamerica Asset and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Asset position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Transamerica Asset vs. Transamerica Capital Growth | Transamerica Asset vs. Transamerica Flexible Income | Transamerica Asset vs. Transamerica High Yield | Transamerica Asset vs. Transamerica Smallmid Cap |
| The Hartford vs. The Hartford Dividend | The Hartford vs. The Hartford Total | The Hartford vs. The Hartford International | The Hartford vs. The Hartford Midcap |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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