Correlation Between American Funds and GLOBAL COSMED
Can any of the company-specific risk be diversified away by investing in both American Funds and GLOBAL COSMED 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 Funds and GLOBAL COSMED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and GLOBAL MED SA, you can compare the effects of market volatilities on American Funds and GLOBAL COSMED 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 Funds with a short position of GLOBAL COSMED. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and GLOBAL COSMED.
Diversification Opportunities for American Funds and GLOBAL COSMED
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and GLOBAL is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and GLOBAL MED SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBAL MED SA and American Funds 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 Funds Fundamental are associated (or correlated) with GLOBAL COSMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLOBAL MED SA has no effect on the direction of American Funds i.e., American Funds and GLOBAL COSMED go up and down completely randomly.
Pair Corralation between American Funds and GLOBAL COSMED
Assuming the 90 days horizon American Funds is expected to generate 5.57 times less return on investment than GLOBAL COSMED. But when comparing it to its historical volatility, American Funds Fundamental is 2.72 times less risky than GLOBAL COSMED. It trades about 0.06 of its potential returns per unit of risk. GLOBAL MED SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 59.00 in GLOBAL MED SA on November 3, 2024 and sell it today you would earn a total of 65.00 from holding GLOBAL MED SA or generate 110.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.41% |
Values | Daily Returns |
American Funds Fundamental vs. GLOBAL MED SA
Performance |
Timeline |
American Funds Funda |
GLOBAL MED SA |
American Funds and GLOBAL COSMED Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Funds and GLOBAL COSMED
The main advantage of trading using opposite American Funds and GLOBAL COSMED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, GLOBAL COSMED 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 GLOBAL COSMED will offset losses from the drop in GLOBAL COSMED's long position.American Funds vs. Federated Emerging Market | American Funds vs. Siit Emerging Markets | American Funds vs. Mid Cap 15x Strategy | American Funds vs. Ashmore Emerging Markets |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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