Correlation Between Valic Company and Federated Ultrashort

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

Diversification Opportunities for Valic Company and Federated Ultrashort

0.82

Correlation Coefficient

Valic Company  Federated Ultrashort

Very poor diversification

The 3 months correlation between Valic and Federated is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Federated Ultrashort Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ultrashort Bond 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 Federated Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ultrashort Bond has no effect on the direction of Valic Company i.e., Valic Company and Federated Ultrashort go up and down completely randomly.

Pair Corralation between Valic Company and Federated Ultrashort

Assuming the 90 days horizon Valic Company I is expected to generate 12.08 times more return on investment than Federated Ultrashort. However, Valic Company is 12.08 times more volatile than Federated Ultrashort Bond. It trades about 0.13 of its potential returns per unit of risk. Federated Ultrashort Bond is currently generating about 0.21 per unit of risk. If you would invest  1,179  in Valic Company I on July 6, 2025 and sell it today you would earn a total of  106.00  from holding Valic Company I or generate 8.99% return on investment over 90 days.

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

Valic Company I  vs.  Federated Ultrashort Bond

Valic Company I

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 10 (%) 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 November 2025.

Federated Ultrashort Bond

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Ultrashort Bond are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Federated Ultrashort 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 Federated Ultrashort

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

The idea behind Valic Company I and Federated Ultrashort Bond 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.