Correlation Between American High-income and Bond Fund
Can any of the company-specific risk be diversified away by investing in both American High-income and Bond 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-income and Bond 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 Municipal and Bond Fund Of, you can compare the effects of market volatilities on American High-income and Bond 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-income with a short position of Bond Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High-income and Bond Fund.
Diversification Opportunities for American High-income and Bond Fund
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Bond is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Bond Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund and American High-income 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 Municipal are associated (or correlated) with Bond Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund has no effect on the direction of American High-income i.e., American High-income and Bond Fund go up and down completely randomly.
Pair Corralation between American High-income and Bond Fund
Assuming the 90 days horizon American High Income Municipal is expected to generate 0.8 times more return on investment than Bond Fund. However, American High Income Municipal is 1.25 times less risky than Bond Fund. It trades about 0.07 of its potential returns per unit of risk. Bond Fund Of is currently generating about 0.05 per unit of risk. If you would invest 1,516 in American High Income Municipal on October 20, 2024 and sell it today you would earn a total of 5.00 from holding American High Income Municipal or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income Municipal vs. Bond Fund Of
Performance |
| Timeline |
| American High Income |
| Bond Fund |
American High-income and Bond Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High-income and Bond Fund
The main advantage of trading using opposite American High-income and Bond Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High-income position performs unexpectedly, Bond 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 Bond Fund will offset losses from the drop in Bond Fund's long position.| American High-income vs. Dodge Cox Stock | American High-income vs. Vest Large Cap | American High-income vs. Ab Large Cap | American High-income vs. Profunds Large Cap Growth |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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