Correlation Between Valic Company and Smallcap Growth

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

Diversification Opportunities for Valic Company and Smallcap Growth

0.89

Correlation Coefficient

Valic Company  Smallcap Growth

Very poor diversification

The 3 months correlation between Valic and Smallcap is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth 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 Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of Valic Company i.e., Valic Company and Smallcap Growth go up and down completely randomly.

Pair Corralation between Valic Company and Smallcap Growth

Assuming the 90 days horizon Valic Company I is expected to generate 1.16 times more return on investment than Smallcap Growth. However, Valic Company is 1.16 times more volatile than Smallcap Growth Fund. It trades about 0.19 of its potential returns per unit of risk. Smallcap Growth Fund is currently generating about 0.16 per unit of risk. If you would invest  1,095  in Valic Company I on May 28, 2025 and sell it today you would earn a total of  154.00  from holding Valic Company I or generate 14.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Valic Company I  vs.  Smallcap Growth Fund

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 weak fundamental indicators, Valic Company showed solid returns over the last few months and may actually be approaching a breakup point.

Smallcap Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Growth Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Smallcap Growth may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Valic Company and Smallcap Growth

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

The idea behind Valic Company I and Smallcap Growth Fund 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.