Correlation Between Valic Company and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Valic Company and Metropolitan West 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 Metropolitan West 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 Metropolitan West High, you can compare the effects of market volatilities on Valic Company and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Metropolitan West.
Diversification Opportunities for Valic Company and Metropolitan West
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valic and Metropolitan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Metropolitan West High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West High 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West High has no effect on the direction of Valic Company i.e., Valic Company and Metropolitan West go up and down completely randomly.
Pair Corralation between Valic Company and Metropolitan West
Assuming the 90 days horizon Valic Company I is expected to generate 2.31 times more return on investment than Metropolitan West. However, Valic Company is 2.31 times more volatile than Metropolitan West High. It trades about 0.07 of its potential returns per unit of risk. Metropolitan West High is currently generating about 0.15 per unit of risk. If you would invest 1,129 in Valic Company I on October 26, 2024 and sell it today you would earn a total of 42.00 from holding Valic Company I or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. Metropolitan West High
Performance |
| Timeline |
| Valic Company I |
| Metropolitan West High |
Valic Company and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Metropolitan West
The main advantage of trading using opposite Valic Company and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Valic Company vs. Metropolitan West High | Valic Company vs. Needham Aggressive Growth | Valic Company vs. Mesirow Financial High | Valic Company vs. Virtus High Yield |
| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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