Correlation Between Valic Company and Transamerica Financial
Can any of the company-specific risk be diversified away by investing in both Valic Company 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 Valic Company and Transamerica Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valic Company I and Transamerica Financial Life, you can compare the effects of market volatilities on Valic Company 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 Valic Company with a short position of Transamerica Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Transamerica Financial.
Diversification Opportunities for Valic Company and Transamerica Financial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Valic and Transamerica is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Transamerica Financial Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Financial and Valic Company 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 Valic Company I 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 Valic Company i.e., Valic Company and Transamerica Financial go up and down completely randomly.
Pair Corralation between Valic Company and Transamerica Financial
Assuming the 90 days horizon Valic Company I is expected to generate 1.73 times more return on investment than Transamerica Financial. However, Valic Company is 1.73 times more volatile than Transamerica Financial Life. It trades about 0.04 of its potential returns per unit of risk. Transamerica Financial Life is currently generating about 0.03 per unit of risk. If you would invest 1,193 in Valic Company I on September 20, 2024 and sell it today you would earn a total of 81.00 from holding Valic Company I or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. Transamerica Financial Life
Performance |
| Timeline |
| Valic Company I |
| Transamerica Financial |
Valic Company and Transamerica Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Transamerica Financial
The main advantage of trading using opposite Valic Company and Transamerica Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company 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.| Valic Company vs. Mid Cap Index | Valic Company vs. Mid Cap Strategic | Valic Company vs. Valic Company I | Valic Company vs. Valic Company I |
| Transamerica Financial vs. Amg River Road | Transamerica Financial vs. Mutual Of America | Transamerica Financial vs. Valic Company I | Transamerica Financial vs. William Blair Small |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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