Correlation Between Cohen Steers and American Funds

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Can any of the company-specific risk be diversified away by investing in both Cohen Steers and American Funds 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 Cohen Steers and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cohen Steers Infrastructure and American Funds Fundamental, you can compare the effects of market volatilities on Cohen Steers and American Funds 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 Cohen Steers with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohen Steers and American Funds.

Diversification Opportunities for Cohen Steers and American Funds

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Cohen and American is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cohen Steers Infrastructure and AMERICAN FUNDS FUNDAMENTAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Funda and Cohen Steers 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 Cohen Steers Infrastructure are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Funda has no effect on the direction of Cohen Steers i.e., Cohen Steers and American Funds go up and down completely randomly.

Pair Corralation between Cohen Steers and American Funds

Assuming the 90 days horizon Cohen Steers is expected to generate 1.8 times less return on investment than American Funds. In addition to that, Cohen Steers is 1.05 times more volatile than American Funds Fundamental. It trades about 0.13 of its total potential returns per unit of risk. American Funds Fundamental is currently generating about 0.24 per unit of volatility. If you would invest  7,551  in American Funds Fundamental on December 29, 2023 and sell it today you would earn a total of  297.00  from holding American Funds Fundamental or generate 3.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Cohen Steers Infrastructure  vs.  AMERICAN FUNDS FUNDAMENTAL

 Performance 
       Timeline  
Cohen Steers Infrast 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Cohen Steers Infrastructure has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Cohen Steers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
American Funds Funda 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in American Funds Fundamental are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, American Funds may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Cohen Steers and American Funds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cohen Steers and American Funds

The main advantage of trading using opposite Cohen Steers and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohen Steers position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.
The idea behind Cohen Steers Infrastructure and American Funds Fundamental 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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