Correlation Between Valic Company and Gotham Defensive
Can any of the company-specific risk be diversified away by investing in both Valic Company and Gotham Defensive 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 Gotham Defensive 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 Gotham Defensive Long, you can compare the effects of market volatilities on Valic Company and Gotham Defensive 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 Gotham Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Gotham Defensive.
Diversification Opportunities for Valic Company and Gotham Defensive
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Valic and Gotham is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Gotham Defensive Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Defensive Long 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 Gotham Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Defensive Long has no effect on the direction of Valic Company i.e., Valic Company and Gotham Defensive go up and down completely randomly.
Pair Corralation between Valic Company and Gotham Defensive
Assuming the 90 days horizon Valic Company I is expected to generate 1.93 times more return on investment than Gotham Defensive. However, Valic Company is 1.93 times more volatile than Gotham Defensive Long. It trades about 0.1 of its potential returns per unit of risk. Gotham Defensive Long is currently generating about 0.09 per unit of risk. If you would invest 1,174 in Valic Company I on September 13, 2024 and sell it today you would earn a total of 197.00 from holding Valic Company I or generate 16.78% 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. Gotham Defensive Long
Performance |
| Timeline |
| Valic Company I |
| Gotham Defensive Long |
Valic Company and Gotham Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Gotham Defensive
The main advantage of trading using opposite Valic Company and Gotham Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Gotham Defensive 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 Gotham Defensive will offset losses from the drop in Gotham Defensive'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 |
| Gotham Defensive vs. Qs Growth Fund | Gotham Defensive vs. Pace Smallmedium Growth | Gotham Defensive vs. Qs Moderate Growth | Gotham Defensive vs. Champlain Mid Cap |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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