Correlation Between Global Diversified and Valic Company

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Can any of the company-specific risk be diversified away by investing in both Global Diversified 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 Global Diversified and Valic Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Diversified Income and Valic Company I, you can compare the effects of market volatilities on Global Diversified 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 Global Diversified with a short position of Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Diversified and Valic Company.

Diversification Opportunities for Global Diversified and Valic Company

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Global and Valic is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Global Diversified Income 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 Global Diversified 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 Global Diversified Income 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 Global Diversified i.e., Global Diversified and Valic Company go up and down completely randomly.

Pair Corralation between Global Diversified and Valic Company

Assuming the 90 days horizon Global Diversified is expected to generate 2.62 times less return on investment than Valic Company. In addition to that, Global Diversified is 1.85 times more volatile than Valic Company I. It trades about 0.11 of its total potential returns per unit of risk. Valic Company I is currently generating about 0.51 per unit of volatility. If you would invest  724.00  in Valic Company I on September 13, 2024 and sell it today you would earn a total of  8.00  from holding Valic Company I or generate 1.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Global Diversified Income  vs.  Valic Company I

 Performance 
       Timeline  
Global Diversified Income 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Global Diversified Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Global Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Valic Company I 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Valic Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global Diversified and Valic Company Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global Diversified and Valic Company

The main advantage of trading using opposite Global Diversified and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Diversified 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.
The idea behind Global Diversified Income and Valic Company I pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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