Correlation Between Valic Company and American Beacon
Can any of the company-specific risk be diversified away by investing in both Valic Company and American Beacon 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 Beacon 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 Beacon Ark, you can compare the effects of market volatilities on Valic Company and American Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and American Beacon.
Diversification Opportunities for Valic Company and American Beacon
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Valic and American is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and American Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ark 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 Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Ark has no effect on the direction of Valic Company i.e., Valic Company and American Beacon go up and down completely randomly.
Pair Corralation between Valic Company and American Beacon
Assuming the 90 days horizon Valic Company is expected to generate 2.78 times less return on investment than American Beacon. But when comparing it to its historical volatility, Valic Company I is 1.84 times less risky than American Beacon. It trades about 0.05 of its potential returns per unit of risk. American Beacon Ark is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 797.00 in American Beacon Ark on September 14, 2024 and sell it today you would earn a total of 831.00 from holding American Beacon Ark or generate 104.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. American Beacon Ark
Performance |
| Timeline |
| Valic Company I |
| American Beacon Ark |
Valic Company and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and American Beacon
The main advantage of trading using opposite Valic Company and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Valic Company vs. Mid Cap Index | Valic Company vs. Mid Cap Strategic | Valic Company vs. Valic Company I | Valic Company vs. Valic Company I |
| American Beacon vs. Heartland Value Plus | American Beacon vs. Valic Company I | American Beacon vs. Amg River Road | American Beacon vs. Victory Rs Partners |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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