Correlation Between Aig Government and Vanguard Developed
Can any of the company-specific risk be diversified away by investing in both Aig Government and Vanguard Developed 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 Vanguard Developed 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 Vanguard Developed Markets, you can compare the effects of market volatilities on Aig Government and Vanguard Developed 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 Vanguard Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Vanguard Developed.
Diversification Opportunities for Aig Government and Vanguard Developed
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aig and Vanguard is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Vanguard Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Developed 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 Vanguard Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Developed has no effect on the direction of Aig Government i.e., Aig Government and Vanguard Developed go up and down completely randomly.
Pair Corralation between Aig Government and Vanguard Developed
Assuming the 90 days horizon Aig Government Money is expected to generate 0.33 times more return on investment than Vanguard Developed. However, Aig Government Money is 3.05 times less risky than Vanguard Developed. It trades about 0.15 of its potential returns per unit of risk. Vanguard Developed Markets is currently generating about 0.01 per unit of risk. If you would invest 1,006 in Aig Government Money on September 4, 2024 and sell it today you would earn a total of 8.00 from holding Aig Government Money or generate 0.8% 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. Vanguard Developed Markets
Performance |
| Timeline |
| Aig Government Money |
| Vanguard Developed |
Aig Government and Vanguard Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Vanguard Developed
The main advantage of trading using opposite Aig Government and Vanguard Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Vanguard Developed 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 Vanguard Developed will offset losses from the drop in Vanguard Developed's long position.| Aig Government vs. Simt Multi Asset Accumulation | Aig Government vs. Saat Market Growth | Aig Government vs. Simt Real Return | Aig Government vs. Simt Small Cap |
| Vanguard Developed vs. Inverse Government Long | Vanguard Developed vs. Aig Government Money | Vanguard Developed vs. Us Government Securities | Vanguard Developed vs. Franklin Adjustable 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 Stocks Directory module to find actively traded stocks across global markets.
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