Correlation Between Small Cap and Valic Company
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Valic Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Special and Valic Company I, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Valic Company.
Diversification Opportunities for Small Cap and Valic Company
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Small and Valic is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Special 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 Small Cap 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 Small Cap Special 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 Small Cap i.e., Small Cap and Valic Company go up and down completely randomly.
Pair Corralation between Small Cap and Valic Company
Assuming the 90 days horizon Small Cap Special is expected to under-perform the Valic Company. But the mutual fund apears to be less risky and, when comparing its historical volatility, Small Cap Special is 1.29 times less risky than Valic Company. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Valic Company I is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,137 in Valic Company I on December 1, 2024 and sell it today you would lose (53.00) from holding Valic Company I or give up 2.48% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
Small Cap Special vs. Valic Company I
Performance |
Timeline |
Small Cap Special |
Valic Company I |
Small Cap and Valic Company Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Small Cap and Valic Company
The main advantage of trading using opposite Small Cap and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.Small Cap vs. Dreyfusstandish Global Fixed | Small Cap vs. Federated Government Income | Small Cap vs. Touchstone Sustainability And | Small Cap vs. Nationwide E Plus |
Valic Company vs. Mid Cap Index | Valic Company vs. Mid Cap Strategic | Valic Company vs. Valic Company I | Valic Company vs. Stock Index 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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