Correlation Between World Core and Aig Government
Can any of the company-specific risk be diversified away by investing in both World Core and Aig Government 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 World Core and Aig Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Core Equity and Aig Government Money, you can compare the effects of market volatilities on World Core and Aig Government 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 World Core with a short position of Aig Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Core and Aig Government.
Diversification Opportunities for World Core and Aig Government
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between World and Aig is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding World Core Equity and Aig Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aig Government Money and World Core 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 World Core Equity are associated (or correlated) with Aig Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aig Government Money has no effect on the direction of World Core i.e., World Core and Aig Government go up and down completely randomly.
Pair Corralation between World Core and Aig Government
Assuming the 90 days horizon World Core Equity is expected to generate 2.76 times more return on investment than Aig Government. However, World Core is 2.76 times more volatile than Aig Government Money. It trades about 0.13 of its potential returns per unit of risk. Aig Government Money is currently generating about 0.08 per unit of risk. If you would invest 2,499 in World Core Equity on August 28, 2024 and sell it today you would earn a total of 46.00 from holding World Core Equity or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Core Equity vs. Aig Government Money
Performance |
| Timeline |
| World Core Equity |
| Aig Government Money |
World Core and Aig Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Core and Aig Government
The main advantage of trading using opposite World Core and Aig Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Core position performs unexpectedly, Aig Government 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 Aig Government will offset losses from the drop in Aig Government's long position.| World Core vs. Intal High Relative | World Core vs. Dfa International | World Core vs. Dfa Inflation Protected | World Core vs. Dfa International Small |
| Aig Government vs. T Rowe Price | Aig Government vs. American Century California | Aig Government vs. Cref Money Market | Aig Government vs. Legg Mason Partners |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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