Correlation Between Valic Company and Blue Chip

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

Diversification Opportunities for Valic Company and Blue Chip

-0.73

Correlation Coefficient

Valic Company  Blue Chip

Pay attention - limited upside

The 3 months correlation between Valic and Blue is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Blue Chip Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Growth 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 Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Growth has no effect on the direction of Valic Company i.e., Valic Company and Blue Chip go up and down completely randomly.

Pair Corralation between Valic Company and Blue Chip

Assuming the 90 days horizon Valic Company I is expected to generate 0.16 times more return on investment than Blue Chip. However, Valic Company I is 6.28 times less risky than Blue Chip. It trades about 0.1 of its potential returns per unit of risk. Blue Chip Growth is currently generating about -0.15 per unit of risk. If you would invest  945.00  in Valic Company I on December 28, 2024 and sell it today you would earn a total of  18.00  from holding Valic Company I or generate 1.9% return on investment over 90 days.

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

Valic Company I  vs.  Blue Chip Growth

Valic Company I

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Valic Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blue Chip Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Chip Growth 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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Valic Company and Blue Chip

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

The idea behind Valic Company I and Blue Chip Growth 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.