Correlation Between Valic Company and Northern Small
Can any of the company-specific risk be diversified away by investing in both Valic Company and Northern Small 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 Northern Small 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 Northern Small Cap, you can compare the effects of market volatilities on Valic Company and Northern Small 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 Northern Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Northern Small.
Diversification Opportunities for Valic Company and Northern Small
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Valic and Northern is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Northern Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Small Cap 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 Northern Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Small Cap has no effect on the direction of Valic Company i.e., Valic Company and Northern Small go up and down completely randomly.
Pair Corralation between Valic Company and Northern Small
Assuming the 90 days horizon Valic Company is expected to generate 1.0 times less return on investment than Northern Small. In addition to that, Valic Company is 1.02 times more volatile than Northern Small Cap. It trades about 0.05 of its total potential returns per unit of risk. Northern Small Cap is currently generating about 0.05 per unit of volatility. If you would invest 1,720 in Northern Small Cap on August 28, 2024 and sell it today you would earn a total of 550.00 from holding Northern Small Cap or generate 31.98% 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. Northern Small Cap
Performance |
| Timeline |
| Valic Company I |
| Northern Small Cap |
Valic Company and Northern Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Northern Small
The main advantage of trading using opposite Valic Company and Northern Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Northern Small 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 Northern Small will offset losses from the drop in Northern Small's long position.| Valic Company vs. T Rowe Price | Valic Company vs. Pnc Emerging Markets | Valic Company vs. Siit Emerging Markets | Valic Company vs. Pace International Emerging |
| Northern Small vs. American Beacon Large | Northern Small vs. Harbor International Fund | Northern Small vs. Credit Suisse Modity | Northern Small vs. Metropolitan West Total |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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