Correlation Between Enhanced and Valic Company

Can any of the company-specific risk be diversified away by investing in both Enhanced 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 Enhanced and Valic Company into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enhanced Large Pany and Valic Company I, you can compare the effects of market volatilities on Enhanced 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 Enhanced with a short position of Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced and Valic Company.

Diversification Opportunities for Enhanced and Valic Company

0.83

Correlation Coefficient

Enhanced  Valic Company

Very poor diversification

The 3 months correlation between Enhanced and Valic is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Large Pany 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 Enhanced 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 Enhanced Large Pany 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 Enhanced i.e., Enhanced and Valic Company go up and down completely randomly.

Pair Corralation between Enhanced and Valic Company

Assuming the 90 days horizon Enhanced Large Pany is expected to generate 2.4 times more return on investment than Valic Company. However, Enhanced is 2.4 times more volatile than Valic Company I. It trades about 0.21 of its potential returns per unit of risk. Valic Company I is currently generating about 0.18 per unit of risk. If you would invest  1,495  in Enhanced Large Pany on May 17, 2025 and sell it today you would earn a total of  134.00  from holding Enhanced Large Pany or generate 8.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Enhanced Large Pany  vs.  Valic Company I

Enhanced Large Pany

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enhanced Large Pany are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Enhanced may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Valic Company I

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 14 (%) 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.

Pair Trading with Enhanced and Valic Company

The main advantage of trading using opposite Enhanced and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhanced 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.

The idea behind Enhanced Large Pany and Valic Company I 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.