Correlation Between Asset Allocation and Valic Company

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

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

Diversification Opportunities for Asset Allocation and Valic Company

0.97

Correlation Coefficient

Asset Allocation  Valic Company

Almost no diversification

The 3 months correlation between Asset and Valic is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Asset Allocation Fund 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 Asset Allocation 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 Asset Allocation Fund 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 Asset Allocation i.e., Asset Allocation and Valic Company go up and down completely randomly.

Pair Corralation between Asset Allocation and Valic Company

Assuming the 90 days horizon Asset Allocation is expected to generate 1.45 times less return on investment than Valic Company. But when comparing it to its historical volatility, Asset Allocation Fund is 2.01 times less risky than Valic Company. It trades about 0.31 of its potential returns per unit of risk. Valic Company I is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,521  in Valic Company I on May 1, 2025 and sell it today you would earn a total of  211.00  from holding Valic Company I or generate 13.87% return on investment over 90 days.

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

Asset Allocation Fund  vs.  Valic Company I

Asset Allocation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asset Allocation Fund are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Asset Allocation may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Valic Company I

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Valic Company showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asset Allocation and Valic Company

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

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.