Correlation Between Transamerica and Sirius

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Can any of the company-specific risk be diversified away by investing in both Transamerica and Sirius 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 and Sirius into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Growth T and Sirius XM Holdings, you can compare the effects of market volatilities on Transamerica and Sirius 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 with a short position of Sirius. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica and Sirius.

Diversification Opportunities for Transamerica and Sirius

TransamericaSiriusDiversified AwayTransamericaSiriusDiversified Away100%
-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Transamerica and Sirius is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Growth T and Sirius XM Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holdings and Transamerica 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 Growth T are associated (or correlated) with Sirius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holdings has no effect on the direction of Transamerica i.e., Transamerica and Sirius go up and down completely randomly.

Pair Corralation between Transamerica and Sirius

Assuming the 90 days horizon Transamerica Growth T is expected to generate 1.78 times more return on investment than Sirius. However, Transamerica is 1.78 times more volatile than Sirius XM Holdings. It trades about -0.01 of its potential returns per unit of risk. Sirius XM Holdings is currently generating about -0.02 per unit of risk. If you would invest  12,376  in Transamerica Growth T on October 16, 2024 and sell it today you would lose (118.00) from holding Transamerica Growth T or give up 0.95% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.36%
ValuesDaily Returns

Transamerica Growth T  vs.  Sirius XM Holdings

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10-50510
JavaScript chart by amCharts 3.21.15TWMTX 82967NBG2
       Timeline  
Transamerica Growth 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Transamerica Growth T has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Transamerica is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan122124126128130132134
Sirius XM Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sirius XM Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sirius is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.152124902330249023808284868890

Transamerica and Sirius Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.47-2.6-1.73-0.860.00.841.722.63.494.37 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15TWMTX 82967NBG2
       Returns  

Pair Trading with Transamerica and Sirius

The main advantage of trading using opposite Transamerica and Sirius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica position performs unexpectedly, Sirius 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 Sirius will offset losses from the drop in Sirius' long position.
The idea behind Transamerica Growth T and Sirius XM Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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