Correlation Between American Funds and Geo
Can any of the company-specific risk be diversified away by investing in both American Funds and Geo 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 Geo 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 Geo Group, you can compare the effects of market volatilities on American Funds and Geo 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 Geo. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Geo.
Diversification Opportunities for American Funds and Geo
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Geo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Group 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 Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of American Funds i.e., American Funds and Geo go up and down completely randomly.
Pair Corralation between American Funds and Geo
Assuming the 90 days horizon American Funds is expected to generate 2.95 times less return on investment than Geo. But when comparing it to its historical volatility, American Funds Fundamental is 3.51 times less risky than Geo. It trades about 0.2 of its potential returns per unit of risk. Geo Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,829 in Geo Group on November 3, 2024 and sell it today you would earn a total of 317.00 from holding Geo Group or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Geo Group
Performance |
| Timeline |
| American Funds Funda |
| Geo Group |
American Funds and Geo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Geo
The main advantage of trading using opposite American Funds and Geo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Geo 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 Geo will offset losses from the drop in Geo's long position.| American Funds vs. World Energy Fund | American Funds vs. Energy Services Fund | American Funds vs. Alpsalerian Energy Infrastructure | American Funds vs. Icon Natural Resources |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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