Correlation Between Valic Company and New Economy
Can any of the company-specific risk be diversified away by investing in both Valic Company and New Economy 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 New Economy 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 New Economy Fund, you can compare the effects of market volatilities on Valic Company and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and New Economy.
Diversification Opportunities for Valic Company and New Economy
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valic and New is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Valic Company i.e., Valic Company and New Economy go up and down completely randomly.
Pair Corralation between Valic Company and New Economy
Assuming the 90 days horizon Valic Company I is expected to generate 1.18 times more return on investment than New Economy. However, Valic Company is 1.18 times more volatile than New Economy Fund. It trades about 0.07 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.07 per unit of risk. If you would invest 1,009 in Valic Company I on September 26, 2024 and sell it today you would earn a total of 279.00 from holding Valic Company I or generate 27.65% 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. New Economy Fund
Performance |
Timeline |
Valic Company I |
New Economy Fund |
Valic Company and New Economy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Valic Company and New Economy
The main advantage of trading using opposite Valic Company and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.Valic Company vs. Mid Cap Index | Valic Company vs. Mid Cap Strategic | Valic Company vs. Valic Company I | Valic Company vs. Valic Company I |
New Economy vs. Mutual Of America | New Economy vs. Valic Company I | New Economy vs. Heartland Value Plus | New Economy vs. William Blair Small |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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