Correlation Between Dow Jones and Valic Company
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Valic Company 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 Dow Jones and Valic Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Valic Company I, you can compare the effects of market volatilities on Dow Jones and Valic Company 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 Dow Jones with a short position of Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Valic Company.
Diversification Opportunities for Dow Jones and Valic Company
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Valic is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Valic Company I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valic Company I and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Valic Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valic Company I has no effect on the direction of Dow Jones i.e., Dow Jones and Valic Company go up and down completely randomly.
Pair Corralation between Dow Jones and Valic Company
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.18 times less return on investment than Valic Company. But when comparing it to its historical volatility, Dow Jones Industrial is 1.14 times less risky than Valic Company. It trades about 0.11 of its potential returns per unit of risk. Valic Company I is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,578 in Valic Company I on September 2, 2024 and sell it today you would earn a total of 606.00 from holding Valic Company I or generate 38.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Valic Company I
Performance |
| Timeline |
Dow Jones and Valic Company Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Valic Company I
Pair trading matchups for Valic Company
Pair Trading with Dow Jones and Valic Company
The main advantage of trading using opposite Dow Jones and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Valic Company 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 Valic Company will offset losses from the drop in Valic Company's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Valic Company vs. Valic Company I | Valic Company vs. Mid Cap Strategic | Valic Company vs. Valic Company I | Valic Company vs. Valic Company I |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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