Correlation Between Valic Company and Equity Growth
Can any of the company-specific risk be diversified away by investing in both Valic Company and Equity Growth 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 Equity Growth 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 Equity Growth Strategy, you can compare the effects of market volatilities on Valic Company and Equity Growth 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 Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Equity Growth.
Diversification Opportunities for Valic Company and Equity Growth
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Valic and Equity is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Equity Growth Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth Strategy 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 Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth Strategy has no effect on the direction of Valic Company i.e., Valic Company and Equity Growth go up and down completely randomly.
Pair Corralation between Valic Company and Equity Growth
Assuming the 90 days horizon Valic Company is expected to generate 1.66 times less return on investment than Equity Growth. But when comparing it to its historical volatility, Valic Company I is 2.38 times less risky than Equity Growth. It trades about 0.11 of its potential returns per unit of risk. Equity Growth Strategy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,245 in Equity Growth Strategy on September 3, 2024 and sell it today you would earn a total of 391.00 from holding Equity Growth Strategy or generate 31.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. Equity Growth Strategy
Performance |
| Timeline |
| Valic Company I |
| Equity Growth Strategy |
Valic Company and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Equity Growth
The main advantage of trading using opposite Valic Company and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| Valic Company vs. Adams Diversified Equity | Valic Company vs. Delaware Limited Term Diversified | Valic Company vs. Tiaa Cref Smallmid Cap Equity | Valic Company vs. Massmutual Premier Diversified |
| Equity Growth vs. Franklin Lifesmart 2050 | Equity Growth vs. Jp Morgan Smartretirement | Equity Growth vs. T Rowe Price | Equity Growth vs. T Rowe Price |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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