Correlation Between Valic Company and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Valic Company and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Valic Company and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Dow Jones.
Diversification Opportunities for Valic Company and Dow Jones
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Valic and Dow is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Valic Company i.e., Valic Company and Dow Jones go up and down completely randomly.
Pair Corralation between Valic Company and Dow Jones
Assuming the 90 days horizon Valic Company I is expected to under-perform the Dow Jones. In addition to that, Valic Company is 1.13 times more volatile than Dow Jones Industrial. It trades about -0.05 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.01 per unit of volatility. If you would invest 4,429,313 in Dow Jones Industrial on September 12, 2024 and sell it today you would lose (4,530) from holding Dow Jones Industrial or give up 0.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Valic Company I vs. Dow Jones Industrial
Performance |
Timeline |
Valic Company and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Valic Company I
Pair trading matchups for Valic Company
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Valic Company and Dow Jones
The main advantage of trading using opposite Valic Company and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.Valic Company vs. Mirova Global Green | Valic Company vs. Ab Global Risk | Valic Company vs. Siit Global Managed | Valic Company vs. Jhancock Global Equity |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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