Correlation Between American Funds and Qs Moderate

Can any of the company-specific risk be diversified away by investing in both American Funds and Qs Moderate 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 Qs Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Funds College and Qs Moderate Growth, you can compare the effects of market volatilities on American Funds and Qs Moderate 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 Qs Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Qs Moderate.

Diversification Opportunities for American Funds and Qs Moderate

0.97

Correlation Coefficient

American Funds  Qs Moderate

Almost no diversification

The 3 months correlation between American and LLAIX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Funds College and Qs Moderate Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Moderate Growth 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 College are associated (or correlated) with Qs Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Moderate Growth has no effect on the direction of American Funds i.e., American Funds and Qs Moderate go up and down completely randomly.

Pair Corralation between American Funds and Qs Moderate

Assuming the 90 days horizon American Funds College is expected to generate 1.05 times more return on investment than Qs Moderate. However, American Funds is 1.05 times more volatile than Qs Moderate Growth. It trades about 0.23 of its potential returns per unit of risk. Qs Moderate Growth is currently generating about 0.19 per unit of risk. If you would invest  1,177  in American Funds College on May 10, 2025 and sell it today you would earn a total of  91.00  from holding American Funds College or generate 7.73% return on investment over 90 days.

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

American Funds College  vs.  Qs Moderate Growth

American Funds College

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds College are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, American Funds may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Qs Moderate Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Moderate Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Qs Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Funds and Qs Moderate

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

The idea behind American Funds College and Qs Moderate Growth 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.