Correlation Between Cardano and American Funds
Can any of the company-specific risk be diversified away by investing in both Cardano and American Funds 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 Cardano and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardano and American Funds New, you can compare the effects of market volatilities on Cardano and American Funds 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 Cardano with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and American Funds.
Diversification Opportunities for Cardano and American Funds
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardano and American is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and American Funds New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds New and Cardano 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 Cardano are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds New has no effect on the direction of Cardano i.e., Cardano and American Funds go up and down completely randomly.
Pair Corralation between Cardano and American Funds
Assuming the 90 days trading horizon Cardano is expected to generate 9.49 times more return on investment than American Funds. However, Cardano is 9.49 times more volatile than American Funds New. It trades about 0.25 of its potential returns per unit of risk. American Funds New is currently generating about -0.05 per unit of risk. If you would invest 35.00 in Cardano on November 1, 2024 and sell it today you would earn a total of 61.00 from holding Cardano or generate 174.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
Cardano vs. American Funds New
Performance |
| Timeline |
| Cardano |
| American Funds New |
Cardano and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardano and American Funds
The main advantage of trading using opposite Cardano and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.The idea behind Cardano and American Funds New 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.| American Funds vs. Allianzgi Global Natural | American Funds vs. Energy Services Fund | American Funds vs. Vanguard Energy Index | American Funds vs. Franklin Natural Resources |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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