Correlation Between Valic Company and International Government
Can any of the company-specific risk be diversified away by investing in both Valic Company and International 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 Valic Company and International Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valic Company I and International Government Bond, you can compare the effects of market volatilities on Valic Company and International 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 Valic Company with a short position of International Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and International Government.
Diversification Opportunities for Valic Company and International Government
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Valic and International is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and International Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Government and Valic Company 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 Valic Company I are associated (or correlated) with International Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Government has no effect on the direction of Valic Company i.e., Valic Company and International Government go up and down completely randomly.
Pair Corralation between Valic Company and International Government
Assuming the 90 days horizon Valic Company I is expected to generate 0.97 times more return on investment than International Government. However, Valic Company I is 1.03 times less risky than International Government. It trades about -0.03 of its potential returns per unit of risk. International Government Bond is currently generating about -0.17 per unit of risk. If you would invest 986.00 in Valic Company I on August 27, 2024 and sell it today you would lose (2.00) from holding Valic Company I or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. International Government Bond
Performance |
| Timeline |
| Valic Company I |
| International Government |
Valic Company and International Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and International Government
The main advantage of trading using opposite Valic Company and International Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, International 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 International Government will offset losses from the drop in International Government's long position.| Valic Company vs. Mid Cap Index | Valic Company vs. Mid Cap Strategic | Valic Company vs. Valic Company I | Valic Company vs. Valic Company I |
| International Government vs. Mid Cap Index | International Government vs. Mid Cap Strategic | International Government vs. Valic Company I | International Government vs. Valic Company I |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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