Correlation Between Western Asset and Valic Company
Can any of the company-specific risk be diversified away by investing in both Western Asset and Valic Company 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 Western Asset and Valic Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Valic Company I, you can compare the effects of market volatilities on Western Asset and Valic Company 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 Western Asset with a short position of Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Valic Company.
Diversification Opportunities for Western Asset and Valic Company
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Valic is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Valic Company I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valic Company I and Western Asset 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 Western Asset Diversified are associated (or correlated) with Valic Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valic Company I has no effect on the direction of Western Asset i.e., Western Asset and Valic Company go up and down completely randomly.
Pair Corralation between Western Asset and Valic Company
Assuming the 90 days horizon Western Asset is expected to generate 7.87 times less return on investment than Valic Company. But when comparing it to its historical volatility, Western Asset Diversified is 1.59 times less risky than Valic Company. It trades about 0.07 of its potential returns per unit of risk. Valic Company I is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,431 in Valic Company I on September 3, 2024 and sell it today you would earn a total of 45.00 from holding Valic Company I or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Valic Company I
Performance |
| Timeline |
| Western Asset Diversified |
| Valic Company I |
Western Asset and Valic Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Valic Company
The main advantage of trading using opposite Western Asset and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Valic Company 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 Valic Company will offset losses from the drop in Valic Company's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Valic Company vs. American Funds American | Valic Company vs. American Funds American | Valic Company vs. American Balanced | Valic Company vs. American Balanced 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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