Correlation Between American Funds and Investment
Can any of the company-specific risk be diversified away by investing in both American Funds and Investment 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 American Funds and Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2050 and Investment Of America, you can compare the effects of market volatilities on American Funds and Investment 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 American Funds with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Investment.
Diversification Opportunities for American Funds and Investment
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Investment is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2050 and Investment Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Of America and American Funds 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 American Funds 2050 are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Of America has no effect on the direction of American Funds i.e., American Funds and Investment go up and down completely randomly.
Pair Corralation between American Funds and Investment
Assuming the 90 days horizon American Funds 2050 is expected to under-perform the Investment. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds 2050 is 1.19 times less risky than Investment. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Investment Of America is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 5,548 in Investment Of America on January 28, 2024 and sell it today you would lose (101.00) from holding Investment Of America or give up 1.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Funds 2050 vs. Investment Of America
Performance |
Timeline |
American Funds 2050 |
Investment Of America |
American Funds and Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Funds and Investment
The main advantage of trading using opposite American Funds and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.American Funds vs. Vanguard Target Retirement | American Funds vs. American Funds 2050 | American Funds vs. Fidelity Freedom 2050 | American Funds vs. Fidelity Freedom Index |
Investment vs. Mfs Value Fund | Investment vs. International Growth And | Investment vs. Jpmorgan High Yield | Investment vs. Mfs International New |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |