Correlation Between American Funds and Itera ASA
Can any of the company-specific risk be diversified away by investing in both American Funds and Itera ASA 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 Itera ASA 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 Itera ASA, you can compare the effects of market volatilities on American Funds and Itera ASA 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 Itera ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Itera ASA.
Diversification Opportunities for American Funds and Itera ASA
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Itera is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Itera ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itera ASA 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 Itera ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itera ASA has no effect on the direction of American Funds i.e., American Funds and Itera ASA go up and down completely randomly.
Pair Corralation between American Funds and Itera ASA
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.42 times more return on investment than Itera ASA. However, American Funds Fundamental is 2.36 times less risky than Itera ASA. It trades about 0.12 of its potential returns per unit of risk. Itera ASA is currently generating about -0.02 per unit of risk. If you would invest 8,194 in American Funds Fundamental on October 23, 2024 and sell it today you would earn a total of 144.00 from holding American Funds Fundamental or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
American Funds Fundamental vs. Itera ASA
Performance |
| Timeline |
| American Funds Funda |
| Itera ASA |
American Funds and Itera ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Itera ASA
The main advantage of trading using opposite American Funds and Itera ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Itera ASA 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 Itera ASA will offset losses from the drop in Itera ASA's long position.| American Funds vs. Small Pany Growth | American Funds vs. Needham Small Cap | American Funds vs. Praxis Small Cap | American Funds vs. Franklin Small Cap |
| Itera ASA vs. Romsdal Sparebank | Itera ASA vs. Helgeland Sparebank | Itera ASA vs. Sparebanken Ost | Itera ASA vs. SD Standard Drilling |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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