Correlation Between Transamerica Financial and Hartford Balanced
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Hartford Balanced 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 Hartford Balanced 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 The Hartford Balanced, you can compare the effects of market volatilities on Transamerica Financial and Hartford Balanced 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 Hartford Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Hartford Balanced.
Diversification Opportunities for Transamerica Financial and Hartford Balanced
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transamerica and Hartford is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and The Hartford Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Balanced 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 Hartford Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Balanced has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Hartford Balanced go up and down completely randomly.
Pair Corralation between Transamerica Financial and Hartford Balanced
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 1.65 times more return on investment than Hartford Balanced. However, Transamerica Financial is 1.65 times more volatile than The Hartford Balanced. It trades about 0.23 of its potential returns per unit of risk. The Hartford Balanced is currently generating about 0.22 per unit of risk. If you would invest 1,059 in Transamerica Financial Life on October 22, 2024 and sell it today you would earn a total of 27.00 from holding Transamerica Financial Life or generate 2.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Transamerica Financial Life vs. The Hartford Balanced
Performance |
Timeline |
Transamerica Financial |
Hartford Balanced |
Transamerica Financial and Hartford Balanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Transamerica Financial and Hartford Balanced
The main advantage of trading using opposite Transamerica Financial and Hartford Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Hartford Balanced 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 Hartford Balanced will offset losses from the drop in Hartford Balanced's long position.Transamerica Financial vs. Needham Aggressive Growth | Transamerica Financial vs. Ab Small Cap | Transamerica Financial vs. L Abbett Growth | Transamerica Financial vs. Ab Small Cap |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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