Correlation Between Transamerica Financial and Alger International
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Alger International 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 Alger International 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 Alger International Growth, you can compare the effects of market volatilities on Transamerica Financial and Alger International 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 Alger International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Alger International.
Diversification Opportunities for Transamerica Financial and Alger International
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transamerica and Alger is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Alger International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger International 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 Alger International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger International has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Alger International go up and down completely randomly.
Pair Corralation between Transamerica Financial and Alger International
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 0.94 times more return on investment than Alger International. However, Transamerica Financial Life is 1.06 times less risky than Alger International. It trades about 0.13 of its potential returns per unit of risk. Alger International Growth is currently generating about -0.02 per unit of risk. If you would invest 1,154 in Transamerica Financial Life on September 12, 2024 and sell it today you would earn a total of 61.00 from holding Transamerica Financial Life or generate 5.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Transamerica Financial Life vs. Alger International Growth
Performance |
Timeline |
Transamerica Financial |
Alger International |
Transamerica Financial and Alger International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Transamerica Financial and Alger International
The main advantage of trading using opposite Transamerica Financial and Alger International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Alger International 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 Alger International will offset losses from the drop in Alger International's long position.Transamerica Financial vs. SCOR PK | Transamerica Financial vs. Morningstar Unconstrained Allocation | Transamerica Financial vs. Thrivent High Yield | Transamerica Financial vs. Via Renewables |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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