Correlation Between American Funds and Aena SA
Can any of the company-specific risk be diversified away by investing in both American Funds and Aena SA 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 Aena SA 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 Aena SA, you can compare the effects of market volatilities on American Funds and Aena SA 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 Aena SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Aena SA.
Diversification Opportunities for American Funds and Aena SA
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Aena is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Aena SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena 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 Aena SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SA has no effect on the direction of American Funds i.e., American Funds and Aena SA go up and down completely randomly.
Pair Corralation between American Funds and Aena SA
Assuming the 90 days horizon American Funds Fundamental is expected to under-perform the Aena SA. In addition to that, American Funds is 1.62 times more volatile than Aena SA. It trades about -0.05 of its total potential returns per unit of risk. Aena SA is currently generating about 0.01 per unit of volatility. If you would invest 19,960 in Aena SA on October 22, 2024 and sell it today you would earn a total of 60.00 from holding Aena SA or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
American Funds Fundamental vs. Aena SA
Performance |
| Timeline |
| American Funds Funda |
| Aena SA |
American Funds and Aena SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Aena SA
The main advantage of trading using opposite American Funds and Aena SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Aena SA 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 Aena SA will offset losses from the drop in Aena SA's long position.| American Funds vs. Ab Large Cap | American Funds vs. Qs Large Cap | American Funds vs. Tax Managed Large Cap | American Funds vs. Avantis Large Cap |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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