Correlation Between Valic Company and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Valic Company and Diamond Hill 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 Diamond Hill 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 Diamond Hill Small, you can compare the effects of market volatilities on Valic Company and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Diamond Hill.
Diversification Opportunities for Valic Company and Diamond Hill
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Valic and Diamond is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Diamond Hill Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Small 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Small has no effect on the direction of Valic Company i.e., Valic Company and Diamond Hill go up and down completely randomly.
Pair Corralation between Valic Company and Diamond Hill
Assuming the 90 days horizon Valic Company I is expected to generate 0.72 times more return on investment than Diamond Hill. However, Valic Company I is 1.39 times less risky than Diamond Hill. It trades about 0.06 of its potential returns per unit of risk. Diamond Hill Small is currently generating about -0.01 per unit of risk. If you would invest 1,093 in Valic Company I on November 5, 2024 and sell it today you would earn a total of 218.00 from holding Valic Company I or generate 19.95% 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. Diamond Hill Small
Performance |
| Timeline |
| Valic Company I |
| Diamond Hill Small |
Valic Company and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Diamond Hill
The main advantage of trading using opposite Valic Company and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Valic Company vs. Delaware Limited Term Diversified | Valic Company vs. Gmo Quality Fund | Valic Company vs. Lord Abbett Diversified | Valic Company vs. Davenport Small Cap |
| Diamond Hill vs. American Century Etf | Diamond Hill vs. Mid Cap Growth Profund | Diamond Hill vs. Small Cap Value | Diamond Hill vs. Applied Finance Explorer |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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