Correlation Between Western Asset and Transamerica Financial
Can any of the company-specific risk be diversified away by investing in both Western Asset and Transamerica Financial 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 Western Asset and Transamerica Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Managed and Transamerica Financial Life, you can compare the effects of market volatilities on Western Asset and Transamerica Financial 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 Western Asset with a short position of Transamerica Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Transamerica Financial.
Diversification Opportunities for Western Asset and Transamerica Financial
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Transamerica is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Transamerica Financial Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Financial and Western 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 Western Asset Managed are associated (or correlated) with Transamerica Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Financial has no effect on the direction of Western Asset i.e., Western Asset and Transamerica Financial go up and down completely randomly.
Pair Corralation between Western Asset and Transamerica Financial
Assuming the 90 days horizon Western Asset is expected to generate 3.17 times less return on investment than Transamerica Financial. But when comparing it to its historical volatility, Western Asset Managed is 3.16 times less risky than Transamerica Financial. It trades about 0.08 of its potential returns per unit of risk. Transamerica Financial Life is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,001 in Transamerica Financial Life on August 31, 2024 and sell it today you would earn a total of 246.00 from holding Transamerica Financial Life or generate 24.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Western Asset Managed vs. Transamerica Financial Life
Performance |
| Timeline |
| Western Asset Managed |
| Transamerica Financial |
Western Asset and Transamerica Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Transamerica Financial
The main advantage of trading using opposite Western Asset and Transamerica Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Transamerica Financial 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 Transamerica Financial will offset losses from the drop in Transamerica Financial's long position.| Western Asset vs. Rationalpier 88 Convertible | Western Asset vs. Columbia Vertible Securities | Western Asset vs. Calamos Dynamic Convertible | Western Asset vs. Fidelity Sai Convertible |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |