Correlation Between Amcap Fund and Investment
Can any of the company-specific risk be diversified away by investing in both Amcap Fund and Investment 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 Amcap Fund and Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amcap Fund Class and Investment Of America, you can compare the effects of market volatilities on Amcap Fund and Investment 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 Amcap Fund with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcap Fund and Investment.
Diversification Opportunities for Amcap Fund and Investment
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amcap and Investment is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class and Investment Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Of America and Amcap Fund 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 Amcap Fund Class are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Of America has no effect on the direction of Amcap Fund i.e., Amcap Fund and Investment go up and down completely randomly.
Pair Corralation between Amcap Fund and Investment
Assuming the 90 days horizon Amcap Fund Class is expected to under-perform the Investment. In addition to that, Amcap Fund is 1.17 times more volatile than Investment Of America. It trades about -0.07 of its total potential returns per unit of risk. Investment Of America is currently generating about -0.06 per unit of volatility. If you would invest 5,913 in Investment Of America on November 28, 2024 and sell it today you would lose (54.00) from holding Investment Of America or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amcap Fund Class vs. Investment Of America
Performance |
| Timeline |
| Amcap Fund Class |
| Investment Of America |
Amcap Fund and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amcap Fund and Investment
The main advantage of trading using opposite Amcap Fund and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.| Amcap Fund vs. Europacific Growth Fund | Amcap Fund vs. Capital World Growth | Amcap Fund vs. Washington Mutual Investors | Amcap Fund vs. American Mutual Fund |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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