Correlation Between Valic Company and American Funds
Can any of the company-specific risk be diversified away by investing in both Valic Company and American Funds 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 American Funds 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 American Funds Growth, you can compare the effects of market volatilities on Valic Company and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and American Funds.
Diversification Opportunities for Valic Company and American Funds
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valic and American is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Growth has no effect on the direction of Valic Company i.e., Valic Company and American Funds go up and down completely randomly.
Pair Corralation between Valic Company and American Funds
Assuming the 90 days horizon Valic Company is expected to generate 2.77 times less return on investment than American Funds. But when comparing it to its historical volatility, Valic Company I is 4.98 times less risky than American Funds. It trades about 0.22 of its potential returns per unit of risk. American Funds Growth is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,667 in American Funds Growth on August 31, 2024 and sell it today you would earn a total of 60.00 from holding American Funds Growth or generate 2.25% 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. American Funds Growth
Performance |
| Timeline |
| Valic Company I |
| American Funds Growth |
Valic Company and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and American Funds
The main advantage of trading using opposite Valic Company and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Valic Company vs. Vanguard High Yield Corporate | Valic Company vs. Vanguard High Yield Porate | Valic Company vs. Blackrock Hi Yld | Valic Company vs. Blackrock High Yield |
| American Funds vs. Blackrock High Yield | American Funds vs. Valic Company I | American Funds vs. Pioneer High Yield | American Funds vs. Metropolitan West 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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