Correlation Between Stock Index and Valic Company
Can any of the company-specific risk be diversified away by investing in both Stock Index and Valic Company 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 Stock Index and Valic Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stock Index Fund and Valic Company I, you can compare the effects of market volatilities on Stock Index and Valic Company 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 Stock Index with a short position of Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stock Index and Valic Company.
Diversification Opportunities for Stock Index and Valic Company
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stock and Valic is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Stock Index Fund and Valic Company I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valic Company I and Stock Index 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 Stock Index Fund are associated (or correlated) with Valic Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valic Company I has no effect on the direction of Stock Index i.e., Stock Index and Valic Company go up and down completely randomly.
Pair Corralation between Stock Index and Valic Company
Assuming the 90 days horizon Stock Index Fund is expected to generate 0.97 times more return on investment than Valic Company. However, Stock Index Fund is 1.03 times less risky than Valic Company. It trades about 0.15 of its potential returns per unit of risk. Valic Company I is currently generating about 0.13 per unit of risk. If you would invest 5,890 in Stock Index Fund on August 30, 2024 and sell it today you would earn a total of 174.00 from holding Stock Index Fund or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Stock Index Fund vs. Valic Company I
Performance |
| Timeline |
| Stock Index Fund |
| Valic Company I |
Stock Index and Valic Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stock Index and Valic Company
The main advantage of trading using opposite Stock Index and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stock Index position performs unexpectedly, Valic Company 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 Valic Company will offset losses from the drop in Valic Company's long position.| Stock Index vs. Sterling Capital Short | Stock Index vs. Transamerica Funds | Stock Index vs. Barings Active Short | Stock Index vs. Touchstone Ohio Tax |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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