Correlation Between Valic Company and New Perspective
Can any of the company-specific risk be diversified away by investing in both Valic Company and New Perspective 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 New Perspective 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 New Perspective Fund, you can compare the effects of market volatilities on Valic Company and New Perspective 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 New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and New Perspective.
Diversification Opportunities for Valic Company and New Perspective
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valic and New is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective 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 New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Valic Company i.e., Valic Company and New Perspective go up and down completely randomly.
Pair Corralation between Valic Company and New Perspective
Assuming the 90 days horizon Valic Company I is expected to under-perform the New Perspective. In addition to that, Valic Company is 1.37 times more volatile than New Perspective Fund. It trades about -0.02 of its total potential returns per unit of risk. New Perspective Fund is currently generating about 0.23 per unit of volatility. If you would invest 6,388 in New Perspective Fund on September 13, 2024 and sell it today you would earn a total of 181.00 from holding New Perspective Fund or generate 2.83% 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. New Perspective Fund
Performance |
| Timeline |
| Valic Company I |
| New Perspective |
Valic Company and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and New Perspective
The main advantage of trading using opposite Valic Company and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective'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 |
| New Perspective vs. Income Fund Of | New Perspective vs. New World Fund | New Perspective vs. American Mutual Fund | New Perspective vs. American Mutual Fund |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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