Correlation Between Valic Company and Inflation Protected

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

Diversification Opportunities for Valic Company and Inflation Protected

-0.69

Correlation Coefficient

Valic Company  Inflation Protected

Excellent diversification

The 3 months correlation between Valic and Inflation is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Inflation Protected Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Inflation Protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Valic Company i.e., Valic Company and Inflation Protected go up and down completely randomly.

Pair Corralation between Valic Company and Inflation Protected

Assuming the 90 days horizon Valic Company I is expected to generate 3.68 times more return on investment than Inflation Protected. However, Valic Company is 3.68 times more volatile than Inflation Protected Fund. It trades about 0.23 of its potential returns per unit of risk. Inflation Protected Fund is currently generating about -0.07 per unit of risk. If you would invest  1,866  in Valic Company I on September 5, 2024 and sell it today you would earn a total of  283.00  from holding Valic Company I or generate 15.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Valic Company I  vs.  Inflation Protected Fund

Valic Company I

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Valic Company showed solid returns over the last few months and may actually be approaching a breakup point.

Inflation Protected

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Valic Company and Inflation Protected

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

The idea behind Valic Company I and Inflation Protected Fund 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.