Correlation Between Valic Company and Transamerica Intermediate

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Can any of the company-specific risk be diversified away by investing in both Valic Company and Transamerica Intermediate 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 Transamerica Intermediate 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 Transamerica Intermediate Bond, you can compare the effects of market volatilities on Valic Company and Transamerica Intermediate 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 Transamerica Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Transamerica Intermediate.

Diversification Opportunities for Valic Company and Transamerica Intermediate

ValicTransamericaDiversified AwayValicTransamericaDiversified Away100%
0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Valic and Transamerica is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Transamerica Intermediate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intermediate 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 Transamerica Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intermediate has no effect on the direction of Valic Company i.e., Valic Company and Transamerica Intermediate go up and down completely randomly.

Pair Corralation between Valic Company and Transamerica Intermediate

Assuming the 90 days horizon Valic Company I is expected to generate 3.62 times more return on investment than Transamerica Intermediate. However, Valic Company is 3.62 times more volatile than Transamerica Intermediate Bond. It trades about 0.04 of its potential returns per unit of risk. Transamerica Intermediate Bond is currently generating about 0.03 per unit of risk. If you would invest  1,143  in Valic Company I on November 26, 2024 and sell it today you would earn a total of  125.00  from holding Valic Company I or generate 10.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Valic Company I  vs.  Transamerica Intermediate Bond

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -8-6-4-2024
JavaScript chart by amCharts 3.21.15VVSCX TMBFX
       Timeline  
Valic Company I 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Valic Company I has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb12.612.81313.213.413.613.814
Transamerica Intermediate 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Intermediate Bond are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Transamerica Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb8.358.48.458.58.558.6

Valic Company and Transamerica Intermediate Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.81-1.37-0.93-0.49-0.06780.280.721.161.62.04 1234
JavaScript chart by amCharts 3.21.15VVSCX TMBFX
       Returns  

Pair Trading with Valic Company and Transamerica Intermediate

The main advantage of trading using opposite Valic Company and Transamerica Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Transamerica Intermediate 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 Transamerica Intermediate will offset losses from the drop in Transamerica Intermediate's long position.
The idea behind Valic Company I and Transamerica Intermediate Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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