Correlation Between Aig Government and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Aig Government and Vanguard Small-cap 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 Small-cap 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 Small Cap Growth, you can compare the effects of market volatilities on Aig Government and Vanguard Small-cap 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 Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Vanguard Small-cap.
Diversification Opportunities for Aig Government and Vanguard Small-cap
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aig and Vanguard is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Vanguard Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap 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 Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Aig Government i.e., Aig Government and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Aig Government and Vanguard Small-cap
Assuming the 90 days horizon Aig Government is expected to generate 9.48 times less return on investment than Vanguard Small-cap. But when comparing it to its historical volatility, Aig Government Money is 6.25 times less risky than Vanguard Small-cap. It trades about 0.05 of its potential returns per unit of risk. Vanguard Small Cap Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,795 in Vanguard Small Cap Growth on August 31, 2024 and sell it today you would earn a total of 2,650 from holding Vanguard Small Cap Growth or generate 45.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aig Government Money vs. Vanguard Small Cap Growth
Performance |
| Timeline |
| Aig Government Money |
| Vanguard Small Cap |
Aig Government and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Vanguard Small-cap
The main advantage of trading using opposite Aig Government and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Vanguard Small-cap 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 Small-cap will offset losses from the drop in Vanguard Small-cap's long position.| Aig Government vs. Western Asset Inflation | Aig Government vs. Aqr Managed Futures | Aig Government vs. Nationwide Inflation Protected Securities | Aig Government vs. Cref Inflation Linked Bond |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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