To add Stream Avatars as an overlay for Twitch Studio, first edit a scene. Next Add a new layer, and select "Screen Share" and then "Add".
Now you need to set the Application window to be Stream Avatars. To do this, locate the "Screen Share Source" on the right side. Then click "Change". From here you need to find "Streaming Avatars" from the list of open programs.
To make the new Screen Share have a transparent background you will need to navigate to the "Border" property on the right side. Click "Edit" and then set the "Opacity" to be 0.
Next you need to make sure your new "Screen Share" is on the correct layer to be an "Overlay" on your streaming content. To do this you need to click and drag the "Screen Share" to be the top element.
The transparency is lost if you ever open any of the properties on the left. Make sure they are collapsed while streaming.
As a last resort, you might have to use the "Green Screen Effect" property to remove the background of Stream Avatars to make it an overlay. Make sure to set it's color to the same color of the background in Stream Avatars.