Correlation Between Amana Developing and American Funds
Can any of the company-specific risk be diversified away by investing in both Amana Developing 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 Amana Developing and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amana Developing World and American Funds New, you can compare the effects of market volatilities on Amana Developing 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 Amana Developing with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amana Developing and American Funds.
Diversification Opportunities for Amana Developing and American Funds
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amana and American is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Amana Developing World 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 Amana Developing 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 Amana Developing World 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 Amana Developing i.e., Amana Developing and American Funds go up and down completely randomly.
Pair Corralation between Amana Developing and American Funds
Assuming the 90 days horizon Amana Developing is expected to generate 1.17 times less return on investment than American Funds. In addition to that, Amana Developing is 1.01 times more volatile than American Funds New. It trades about 0.06 of its total potential returns per unit of risk. American Funds New is currently generating about 0.07 per unit of volatility. If you would invest 6,400 in American Funds New on September 12, 2024 and sell it today you would earn a total of 1,852 from holding American Funds New or generate 28.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amana Developing World vs. American Funds New
Performance |
| Timeline |
| Amana Developing World |
| American Funds New |
Amana Developing and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amana Developing and American Funds
The main advantage of trading using opposite Amana Developing and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amana Developing 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.| Amana Developing vs. American Funds New | Amana Developing vs. SCOR PK | Amana Developing vs. Morningstar Unconstrained Allocation | Amana Developing vs. Via Renewables |
| American Funds vs. Elfun Government Money | American Funds vs. Edward Jones Money | American Funds vs. Aig Government Money | American Funds vs. Franklin Government Money |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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