Correlation Between American Funds and Wealthbuilder Growth

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

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

Diversification Opportunities for American Funds and Wealthbuilder Growth

-0.52

Correlation Coefficient

American Funds  Wealthbuilder Growth

Excellent diversification

The 3 months correlation between American and Wealthbuilder is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Wealthbuilder Growth Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wealthbuilder 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 American are associated (or correlated) with Wealthbuilder Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wealthbuilder Growth has no effect on the direction of American Funds i.e., American Funds and Wealthbuilder Growth go up and down completely randomly.

Pair Corralation between American Funds and Wealthbuilder Growth

Assuming the 90 days horizon American Funds American is expected to under-perform the Wealthbuilder Growth. In addition to that, American Funds is 1.07 times more volatile than Wealthbuilder Growth Balanced. It trades about -0.04 of its total potential returns per unit of risk. Wealthbuilder Growth Balanced is currently generating about 0.07 per unit of volatility. If you would invest  1,231  in Wealthbuilder Growth Balanced on October 8, 2025 and sell it today you would earn a total of  48.00  from holding Wealthbuilder Growth Balanced or generate 3.9% return on investment over 90 days.

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

American Funds American  vs.  Wealthbuilder Growth Balanced

American Funds American

Risk-Adjusted Performance

Weakest

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

Wealthbuilder Growth

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Wealthbuilder Growth Balanced are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Wealthbuilder Growth 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 Wealthbuilder Growth

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

The idea behind American Funds American and Wealthbuilder Growth Balanced 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.