Correlation Between Aig Government and Iaadx
Can any of the company-specific risk be diversified away by investing in both Aig Government and Iaadx 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 Aig Government and Iaadx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Iaadx, you can compare the effects of market volatilities on Aig Government and Iaadx 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 Aig Government with a short position of Iaadx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Iaadx.
Diversification Opportunities for Aig Government and Iaadx
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aig and Iaadx is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Iaadx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iaadx and Aig Government 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 Aig Government Money are associated (or correlated) with Iaadx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iaadx has no effect on the direction of Aig Government i.e., Aig Government and Iaadx go up and down completely randomly.
Pair Corralation between Aig Government and Iaadx
Assuming the 90 days horizon Aig Government is expected to generate 1.38 times less return on investment than Iaadx. But when comparing it to its historical volatility, Aig Government Money is 1.26 times less risky than Iaadx. It trades about 0.11 of its potential returns per unit of risk. Iaadx is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 894.00 in Iaadx on August 25, 2024 and sell it today you would earn a total of 34.00 from holding Iaadx or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aig Government Money vs. Iaadx
Performance |
| Timeline |
| Aig Government Money |
| Iaadx |
Aig Government and Iaadx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Iaadx
The main advantage of trading using opposite Aig Government and Iaadx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Iaadx 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 Iaadx will offset losses from the drop in Iaadx's long position.| Aig Government vs. Simt Multi Asset Accumulation | Aig Government vs. Simt Small Cap | Aig Government vs. Tax Free Conservative Income | Aig Government vs. Tax Free Conservative |
| Iaadx vs. Us Government Securities | Iaadx vs. Dreyfus Government Cash | Iaadx vs. Aig Government Money | Iaadx vs. Vanguard Short Term Government |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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