Correlation Between American Funds and Valic Company
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Valic Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Valic Company I, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Valic Company.
Diversification Opportunities for American Funds and Valic Company
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Valic is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American 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 American Funds 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 American Funds American 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 American Funds i.e., American Funds and Valic Company go up and down completely randomly.
Pair Corralation between American Funds and Valic Company
Assuming the 90 days horizon American Funds American is expected to generate 1.0 times more return on investment than Valic Company. However, American Funds American is 1.0 times less risky than Valic Company. It trades about 0.12 of its potential returns per unit of risk. Valic Company I is currently generating about 0.1 per unit of risk. If you would invest 2,937 in American Funds American on September 12, 2024 and sell it today you would earn a total of 765.00 from holding American Funds American or generate 26.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
American Funds American vs. Valic Company I
Performance |
| Timeline |
| American Funds American |
| Valic Company I |
American Funds and Valic Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Valic Company
The main advantage of trading using opposite American Funds and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Western Asset Municipal | American Funds vs. Bbh Intermediate Municipal | American Funds vs. Doubleline Yield Opportunities | American Funds vs. T Rowe Price |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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