Correlation Between Short-term Government and Aig Government
Can any of the company-specific risk be diversified away by investing in both Short-term Government and Aig Government 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 Short-term Government and Aig Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Term Government Fund and Aig Government Money, you can compare the effects of market volatilities on Short-term Government and Aig Government 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 Short-term Government with a short position of Aig Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Government and Aig Government.
Diversification Opportunities for Short-term Government and Aig Government
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Short-term and Aig is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Government Fund and Aig Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aig Government Money and Short-term 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 Short Term Government Fund are associated (or correlated) with Aig Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aig Government Money has no effect on the direction of Short-term Government i.e., Short-term Government and Aig Government go up and down completely randomly.
Pair Corralation between Short-term Government and Aig Government
Assuming the 90 days horizon Short-term Government is expected to generate 3.57 times less return on investment than Aig Government. But when comparing it to its historical volatility, Short Term Government Fund is 1.77 times less risky than Aig Government. It trades about 0.06 of its potential returns per unit of risk. Aig Government Money is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,004 in Aig Government Money on November 3, 2024 and sell it today you would earn a total of 4.00 from holding Aig Government Money or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Term Government Fund vs. Aig Government Money
Performance |
| Timeline |
| Short Term Government |
| Aig Government Money |
Short-term Government and Aig Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short-term Government and Aig Government
The main advantage of trading using opposite Short-term Government and Aig Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-term Government position performs unexpectedly, Aig Government 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 Aig Government will offset losses from the drop in Aig Government's long position.| Short-term Government vs. Gugg Actv Invmt | Short-term Government vs. Gmo High Yield | Short-term Government vs. Rbc Bluebay Global | Short-term Government vs. Barings High Yield |
| Aig Government vs. Blackrock Moderate Prepared | Aig Government vs. Tiaa Cref Lifestyle Moderate | Aig Government vs. Wilmington Trust Retirement | Aig Government vs. Lifestyle Ii Moderate |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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