Correlation Between Valic Company and Henderson Emerging

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

Diversification Opportunities for Valic Company and Henderson Emerging

-0.6

Correlation Coefficient

Valic Company  Henderson Emerging

Excellent diversification

The 3 months correlation between Valic and Henderson is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Henderson Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Emerging 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 Henderson Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Emerging has no effect on the direction of Valic Company i.e., Valic Company and Henderson Emerging go up and down completely randomly.

Pair Corralation between Valic Company and Henderson Emerging

Assuming the 90 days horizon Valic Company I is expected to under-perform the Henderson Emerging. In addition to that, Valic Company is 1.75 times more volatile than Henderson Emerging Markets. It trades about -0.41 of its total potential returns per unit of risk. Henderson Emerging Markets is currently generating about -0.03 per unit of volatility. If you would invest  944.00  in Henderson Emerging Markets on September 25, 2024 and sell it today you would lose (4.00) from holding Henderson Emerging Markets or give up 0.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Valic Company I  vs.  Henderson Emerging Markets

Valic Company I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valic Company I has generated negative risk-adjusted returns adding no value to fund investors. 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.

Henderson Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henderson Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Henderson Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Valic Company and Henderson Emerging

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

The idea behind Valic Company I and Henderson Emerging Markets 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.