Correlation Between Valic Company and Real Estate
Can any of the company-specific risk be diversified away by investing in both Valic Company and Real Estate 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 Real Estate 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 Real Estate Fund, you can compare the effects of market volatilities on Valic Company and Real Estate 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 Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Real Estate.
Diversification Opportunities for Valic Company and Real Estate
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Valic and Real is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Real Estate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Fund 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 Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Fund has no effect on the direction of Valic Company i.e., Valic Company and Real Estate go up and down completely randomly.
Pair Corralation between Valic Company and Real Estate
Assuming the 90 days horizon Valic Company is expected to generate 3.32 times less return on investment than Real Estate. But when comparing it to its historical volatility, Valic Company I is 4.82 times less risky than Real Estate. It trades about 0.26 of its potential returns per unit of risk. Real Estate Fund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,379 in Real Estate Fund on September 2, 2024 and sell it today you would earn a total of 493.00 from holding Real Estate Fund or generate 20.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. Real Estate Fund
Performance |
| Timeline |
| Valic Company I |
| Real Estate Fund |
Valic Company and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Real Estate
The main advantage of trading using opposite Valic Company and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.| Valic Company vs. Mid Cap Index | Valic Company vs. Mid Cap Strategic | Valic Company vs. Stock Index Fund | Valic Company vs. Broad Cap Value |
| Real Estate vs. Utilities Fund Investor | Real Estate vs. Emerging Markets Fund | Real Estate vs. Heritage Fund Investor | Real Estate vs. Value Fund Investor |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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