Correlation Between Ultrasmall Cap and Valic Company

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

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

Diversification Opportunities for Ultrasmall Cap and Valic Company

0.95

Correlation Coefficient

Ultrasmall Cap  Valic Company

Almost no diversification

The 3 months correlation between Ultrasmall and Valic is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ultrasmall Cap Profund Ultrasm 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 Ultrasmall Cap 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 Ultrasmall Cap Profund Ultrasmall Cap 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 Ultrasmall Cap i.e., Ultrasmall Cap and Valic Company go up and down completely randomly.

Pair Corralation between Ultrasmall Cap and Valic Company

Assuming the 90 days horizon Ultrasmall Cap Profund Ultrasmall Cap is expected to generate 2.03 times more return on investment than Valic Company. However, Ultrasmall Cap is 2.03 times more volatile than Valic Company I. It trades about 0.14 of its potential returns per unit of risk. Valic Company I is currently generating about 0.14 per unit of risk. If you would invest  5,247  in Ultrasmall Cap Profund Ultrasmall Cap on May 2, 2025 and sell it today you would earn a total of  1,042  from holding Ultrasmall Cap Profund Ultrasmall Cap or generate 19.86% return on investment over 90 days.

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

Ultrasmall Cap Profund Ultrasm  vs.  Valic Company I

Ultrasmall Cap Profund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrasmall Cap Profund Ultrasmall Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ultrasmall Cap showed solid returns over the last few months and may actually be approaching a breakup point.

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 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Valic Company may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Ultrasmall Cap and Valic Company

The main advantage of trading using opposite Ultrasmall Cap and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrasmall Cap 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 Ultrasmall Cap Profund Ultrasmall Cap 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.