Correlation Between American Funds and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both American Funds and Nippon Steel 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 Nippon Steel 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 Nippon Steel Corp, you can compare the effects of market volatilities on American Funds and Nippon Steel 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 Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Nippon Steel.
Diversification Opportunities for American Funds and Nippon Steel
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Nippon is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Nippon Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel Corp 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel Corp has no effect on the direction of American Funds i.e., American Funds and Nippon Steel go up and down completely randomly.
Pair Corralation between American Funds and Nippon Steel
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.7 times more return on investment than Nippon Steel. However, American Funds Fundamental is 1.42 times less risky than Nippon Steel. It trades about 0.2 of its potential returns per unit of risk. Nippon Steel Corp is currently generating about 0.02 per unit of risk. If you would invest 8,096 in American Funds Fundamental on November 3, 2024 and sell it today you would earn a total of 322.00 from holding American Funds Fundamental or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Nippon Steel Corp
Performance |
| Timeline |
| American Funds Funda |
| Nippon Steel Corp |
American Funds and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Nippon Steel
The main advantage of trading using opposite American Funds and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Nippon Steel 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 Nippon Steel will offset losses from the drop in Nippon Steel'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 |
| Nippon Steel vs. Olympic Steel | Nippon Steel vs. POSCO Holdings | Nippon Steel vs. Steel Dynamics | Nippon Steel vs. Outokumpu Oyj ADR |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |