Correlation Between American Funds and Know Labs
Can any of the company-specific risk be diversified away by investing in both American Funds and Know Labs 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 Know Labs 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 Know Labs, you can compare the effects of market volatilities on American Funds and Know Labs 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 Know Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Know Labs.
Diversification Opportunities for American Funds and Know Labs
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Know is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Know Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know Labs 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 Know Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know Labs has no effect on the direction of American Funds i.e., American Funds and Know Labs go up and down completely randomly.
Pair Corralation between American Funds and Know Labs
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.15 times more return on investment than Know Labs. However, American Funds Fundamental is 6.57 times less risky than Know Labs. It trades about 0.06 of its potential returns per unit of risk. Know Labs is currently generating about -0.07 per unit of risk. If you would invest 7,352 in American Funds Fundamental on November 3, 2024 and sell it today you would earn a total of 1,066 from holding American Funds Fundamental or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Know Labs
Performance |
| Timeline |
| American Funds Funda |
| Know Labs |
American Funds and Know Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Know Labs
The main advantage of trading using opposite American Funds and Know Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Know Labs 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 Know Labs will offset losses from the drop in Know Labs' 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 |
| Know Labs vs. Wearable Devices | Know Labs vs. Yoshiharu Global Co | Know Labs vs. bioAffinity Technologies, | Know Labs vs. Jianzhi Education Technology |
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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