Correlation Between Transamerica Financial and Voya Us

Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Voya Us 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 Voya Us 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 Voya Stock Index, you can compare the effects of market volatilities on Transamerica Financial and Voya Us 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 Voya Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Voya Us.

Diversification Opportunities for Transamerica Financial and Voya Us

0.26

Correlation Coefficient

Transamerica Financial  Voya Us

Modest diversification

The 3 months correlation between Transamerica and Voya is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Voya Stock Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Stock Index 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 Voya Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Stock Index has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Voya Us go up and down completely randomly.

Pair Corralation between Transamerica Financial and Voya Us

Assuming the 90 days horizon Transamerica Financial Life is expected to under-perform the Voya Us. In addition to that, Transamerica Financial is 1.38 times more volatile than Voya Stock Index. It trades about -0.15 of its total potential returns per unit of risk. Voya Stock Index is currently generating about -0.07 per unit of volatility. If you would invest  2,095  in Voya Stock Index on December 4, 2024 and sell it today you would lose (76.00) from holding Voya Stock Index or give up 3.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Transamerica Financial Life  vs.  Voya Stock Index

Transamerica Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transamerica Financial Life has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Voya Stock Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Stock Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Voya Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Transamerica Financial and Voya Us

The main advantage of trading using opposite Transamerica Financial and Voya Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Voya Us 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 Voya Us will offset losses from the drop in Voya Us' long position.

The idea behind Transamerica Financial Life and Voya Stock Index 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..