Correlation Between Aig Government and Davis New

Can any of the company-specific risk be diversified away by investing in both Aig Government and Davis New 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 Aig Government and Davis New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aig Government Money and Davis New York, you can compare the effects of market volatilities on Aig Government and Davis New 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 Aig Government with a short position of Davis New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Davis New.

Diversification Opportunities for Aig Government and Davis New

0.44

Correlation Coefficient

Aig Government  Davis New

Very weak diversification

The 3 months correlation between Aig and Davis is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Davis New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis New York and Aig Government 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 Aig Government Money are associated (or correlated) with Davis New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis New York has no effect on the direction of Aig Government i.e., Aig Government and Davis New go up and down completely randomly.

Pair Corralation between Aig Government and Davis New

Assuming the 90 days horizon Aig Government Money is expected to generate 0.13 times more return on investment than Davis New. However, Aig Government Money is 7.7 times less risky than Davis New. It trades about 0.04 of its potential returns per unit of risk. Davis New York is currently generating about -0.04 per unit of risk. If you would invest  992.00  in Aig Government Money on October 12, 2024 and sell it today you would earn a total of  13.00  from holding Aig Government Money or generate 1.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Aig Government Money  vs.  Davis New York

Aig Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aig Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aig Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Davis New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davis New York has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Aig Government and Davis New

The main advantage of trading using opposite Aig Government and Davis New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Davis New 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 Davis New will offset losses from the drop in Davis New's long position.

The idea behind Aig Government Money and Davis New York 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.