Correlation Between Valic Company and Fundamental Investors

By analyzing existing cross correlation between Valic Company I and Fundamental Investors Class, you can compare the effects of market volatilities on Valic Company and Fundamental Investors 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 Fundamental Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Fundamental Investors.

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

Diversification Opportunities for Valic Company and Fundamental Investors

0.98
  Correlation Coefficient
Valic Company I
Fundamental Investors

Almost no diversification

The 3 months correlation between Valic and Fundamental is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Fundamental Investors Class in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Investors 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 Fundamental Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Investors has no effect on the direction of Valic Company i.e., Valic Company and Fundamental Investors go up and down completely randomly.

Pair Corralation between Valic Company and Fundamental Investors

Assuming the 90 days horizon Valic Company I is expected to generate 0.99 times more return on investment than Fundamental Investors. However, Valic Company I is 1.01 times less risky than Fundamental Investors. It trades about 0.17 of its potential returns per unit of risk. Fundamental Investors Class is currently generating about 0.17 per unit of risk. If you would invest  4,063  in Valic Company I on July 25, 2021 and sell it today you would earn a total of  1,653  from holding Valic Company I or generate 40.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Valic Company I  vs.  Fundamental Investors Class

 Performance (%) 
      Timeline 
Valic Company I 
 Valic Performance
5 of 100
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 forward indicators, Valic Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Fundamental Investors 
 Fundamental Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Fundamental Investors Class are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fundamental Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Valic Company and Fundamental Investors Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Valic Company and Fundamental Investors

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

Valic Company I

Pair trading matchups for Valic Company

The idea behind Valic Company I and Fundamental Investors Class 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.

Fundamental Investors Class

Pair trading matchups for Fundamental Investors

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 Fund Screener module to find activelly-traded funds from around the world traded on over 30 global exchanges.

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