Correlation Between Valic Company and Federated Strategic

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

Diversification Opportunities for Valic Company and Federated Strategic

0.68

Correlation Coefficient

Valic Company  Federated Strategic

Poor diversification

The 3 months correlation between Valic and Federated is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Federated Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic 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 Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic has no effect on the direction of Valic Company i.e., Valic Company and Federated Strategic go up and down completely randomly.

Pair Corralation between Valic Company and Federated Strategic

Assuming the 90 days horizon Valic Company I is expected to generate 5.98 times more return on investment than Federated Strategic. However, Valic Company is 5.98 times more volatile than Federated Strategic Income. It trades about 0.07 of its potential returns per unit of risk. Federated Strategic Income is currently generating about 0.14 per unit of risk. If you would invest  1,253  in Valic Company I on August 28, 2025 and sell it today you would earn a total of  62.00  from holding Valic Company I or generate 4.95% return on investment over 90 days.

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

Valic Company I  vs.  Federated Strategic Income

Valic Company I

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 5 (%) 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.

Federated Strategic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Strategic Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Federated Strategic 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 Strategic

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

The idea behind Valic Company I and Federated Strategic Income 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.