Correlation Between American Funds and L E
Can any of the company-specific risk be diversified away by investing in both American Funds and L E 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 L E 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 L E Lundbergfretagen, you can compare the effects of market volatilities on American Funds and L E 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 L E. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and L E.
Diversification Opportunities for American Funds and L E
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and LUND-B is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and L E Lundbergfretagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L E Lundbergfretagen 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 L E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L E Lundbergfretagen has no effect on the direction of American Funds i.e., American Funds and L E go up and down completely randomly.
Pair Corralation between American Funds and L E
Assuming the 90 days horizon American Funds is expected to generate 1.28 times less return on investment than L E. In addition to that, American Funds is 1.21 times more volatile than L E Lundbergfretagen. It trades about 0.2 of its total potential returns per unit of risk. L E Lundbergfretagen is currently generating about 0.31 per unit of volatility. If you would invest 50,700 in L E Lundbergfretagen on November 3, 2024 and sell it today you would earn a total of 2,750 from holding L E Lundbergfretagen or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Funds Fundamental vs. L E Lundbergfretagen
Performance |
| Timeline |
| American Funds Funda |
| L E Lundbergfretagen |
American Funds and L E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and L E
The main advantage of trading using opposite American Funds and L E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, L E 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 L E will offset losses from the drop in L E'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 |
| L E vs. Investment AB Latour | L E vs. Industrivarden AB ser | L E vs. Kinnevik Investment AB | L E vs. Investor AB ser |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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