Correlation Between American Funds and Multi-index 2060
Can any of the company-specific risk be diversified away by investing in both American Funds and Multi-index 2060 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 Multi-index 2060 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2060 and Multi Index 2060 Lifetime, you can compare the effects of market volatilities on American Funds and Multi-index 2060 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 Multi-index 2060. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Multi-index 2060.
Diversification Opportunities for American Funds and Multi-index 2060
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Multi-index is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2060 and Multi Index 2060 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2060 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 2060 are associated (or correlated) with Multi-index 2060. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2060 has no effect on the direction of American Funds i.e., American Funds and Multi-index 2060 go up and down completely randomly.
Pair Corralation between American Funds and Multi-index 2060
Assuming the 90 days horizon American Funds is expected to generate 1.32 times less return on investment than Multi-index 2060. In addition to that, American Funds is 1.01 times more volatile than Multi Index 2060 Lifetime. It trades about 0.25 of its total potential returns per unit of risk. Multi Index 2060 Lifetime is currently generating about 0.33 per unit of volatility. If you would invest 1,607 in Multi Index 2060 Lifetime on September 3, 2024 and sell it today you would earn a total of 66.00 from holding Multi Index 2060 Lifetime or generate 4.11% 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 2060 vs. Multi Index 2060 Lifetime
Performance |
| Timeline |
| American Funds 2060 |
| Multi Index 2060 |
American Funds and Multi-index 2060 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Multi-index 2060
The main advantage of trading using opposite American Funds and Multi-index 2060 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Multi-index 2060 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 Multi-index 2060 will offset losses from the drop in Multi-index 2060's long position.| American Funds vs. American Funds 2055 | American Funds vs. American Funds 2050 | American Funds vs. American Funds 2045 | American Funds vs. American Funds 2040 |
| Multi-index 2060 vs. American Funds 2060 | Multi-index 2060 vs. American Funds 2060 | Multi-index 2060 vs. American Funds 2060 | Multi-index 2060 vs. T Rowe Price |
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 Stocks Directory module to find actively traded stocks across global markets.
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