Correlation Between Tax-managed and Amcap Fund

Can any of the company-specific risk be diversified away by investing in both Tax-managed and Amcap Fund 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 Tax-managed and Amcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tax Managed Mid Small and Amcap Fund Class, you can compare the effects of market volatilities on Tax-managed and Amcap Fund 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 Tax-managed with a short position of Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-managed and Amcap Fund.

Diversification Opportunities for Tax-managed and Amcap Fund

0.97

Correlation Coefficient

Tax-managed  Amcap Fund

Almost no diversification

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

Pair Corralation between Tax-managed and Amcap Fund

Assuming the 90 days horizon Tax-managed is expected to generate 1.27 times less return on investment than Amcap Fund. In addition to that, Tax-managed is 1.28 times more volatile than Amcap Fund Class. It trades about 0.13 of its total potential returns per unit of risk. Amcap Fund Class is currently generating about 0.22 per unit of volatility. If you would invest  3,118  in Amcap Fund Class on May 4, 2025 and sell it today you would earn a total of  365.00  from holding Amcap Fund Class or generate 11.71% return on investment over 90 days.

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

Tax Managed Mid Small  vs.  Amcap Fund Class

Tax Managed Mid

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Mid Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tax-managed may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Amcap Fund Class

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amcap Fund Class are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Amcap Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Tax-managed and Amcap Fund

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

The idea behind Tax Managed Mid Small and Amcap Fund Class 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.