Correlation Between American Funds and First Investors

Can any of the company-specific risk be diversified away by investing in both American Funds and First 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 American Funds and First Investors 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 First Investors Growth, you can compare the effects of market volatilities on American Funds and First 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 American Funds with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and First Investors.

Diversification Opportunities for American Funds and First Investors

0.91

Correlation Coefficient

American Funds  First Investors

Almost no diversification

The 3 months correlation between American and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and First Investors Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Growth has no effect on the direction of American Funds i.e., American Funds and First Investors go up and down completely randomly.

Pair Corralation between American Funds and First Investors

Assuming the 90 days horizon American Funds is expected to generate 1.3 times less return on investment than First Investors. But when comparing it to its historical volatility, American Funds American is 1.37 times less risky than First Investors. It trades about 0.13 of its potential returns per unit of risk. First Investors Growth is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,666  in First Investors Growth on June 28, 2025 and sell it today you would earn a total of  22.00  from holding First Investors Growth or generate 1.32% 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 American  vs.  First Investors Growth

American Funds American

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds American are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Investors Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Investors Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, First Investors 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 First Investors

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

The idea behind American Funds American and First Investors 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.