Correlation Between Valic Company and Locorr Dynamic

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

Diversification Opportunities for Valic Company and Locorr Dynamic

0.71

Correlation Coefficient

Valic Company  Locorr Dynamic

Poor diversification

The 3 months correlation between Valic and Locorr is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Locorr Dynamic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Dynamic Equity 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 Locorr Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Dynamic Equity has no effect on the direction of Valic Company i.e., Valic Company and Locorr Dynamic go up and down completely randomly.

Pair Corralation between Valic Company and Locorr Dynamic

Assuming the 90 days horizon Valic Company is expected to generate 4.61 times less return on investment than Locorr Dynamic. But when comparing it to its historical volatility, Valic Company I is 3.2 times less risky than Locorr Dynamic. It trades about 0.2 of its potential returns per unit of risk. Locorr Dynamic Equity is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,085  in Locorr Dynamic Equity on August 31, 2024 and sell it today you would earn a total of  101.00  from holding Locorr Dynamic Equity or generate 9.31% return on investment over 90 days.

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

Valic Company I  vs.  Locorr Dynamic Equity

Valic Company I

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Valic Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Locorr Dynamic Equity

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Locorr Dynamic Equity are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Locorr Dynamic may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Valic Company and Locorr Dynamic

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

The idea behind Valic Company I and Locorr Dynamic Equity 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.