Correlation Between Valic Company and Real Estate

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

Diversification Opportunities for Valic Company and Real Estate

0.28

Correlation Coefficient

Valic Company  Real Estate

Modest diversification

The 3 months correlation between Valic and Real is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Real Estate Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Ultrasector 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 Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Ultrasector has no effect on the direction of Valic Company i.e., Valic Company and Real Estate go up and down completely randomly.

Pair Corralation between Valic Company and Real Estate

Assuming the 90 days horizon Valic Company I is expected to generate 0.67 times more return on investment than Real Estate. However, Valic Company I is 1.49 times less risky than Real Estate. It trades about -0.32 of its potential returns per unit of risk. Real Estate Ultrasector is currently generating about -0.38 per unit of risk. If you would invest  1,390  in Valic Company I on October 3, 2024 and sell it today you would lose (112.00) from holding Valic Company I or give up 8.06% of portfolio value over 90 days.

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

Valic Company I  vs.  Real Estate Ultrasector

Valic Company I

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 1 (%) 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.

Real Estate Ultrasector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Estate Ultrasector 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 forward 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 Valic Company and Real Estate

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

The idea behind Valic Company I and Real Estate Ultrasector 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.