Correlation Between American High and Income Fund
Can any of the company-specific risk be diversified away by investing in both American High and Income 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 American High and Income Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American High Income and Income Fund Of, you can compare the effects of market volatilities on American High and Income 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 American High with a short position of Income Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High and Income Fund.
Diversification Opportunities for American High and Income Fund
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Income is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American High Income and Income Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund and American High 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 High Income are associated (or correlated) with Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund has no effect on the direction of American High i.e., American High and Income Fund go up and down completely randomly.
Pair Corralation between American High and Income Fund
Assuming the 90 days horizon American High is expected to generate 1.03 times less return on investment than Income Fund. But when comparing it to its historical volatility, American High Income is 1.72 times less risky than Income Fund. It trades about 0.14 of its potential returns per unit of risk. Income Fund Of is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,142 in Income Fund Of on August 27, 2024 and sell it today you would earn a total of 467.00 from holding Income Fund Of or generate 21.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income vs. Income Fund Of
Performance |
| Timeline |
| American High Income |
| Income Fund |
American High and Income Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High and Income Fund
The main advantage of trading using opposite American High and Income Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High position performs unexpectedly, Income 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 Income Fund will offset losses from the drop in Income Fund's long position.| American High vs. Income Fund Of | American High vs. New World Fund | American High vs. American Mutual Fund | American High vs. American Mutual Fund |
| Income Fund vs. Capital Income Builder | Income Fund vs. Capital World Growth | Income Fund vs. American Balanced | Income Fund vs. American Funds Fundamental |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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