Correlation Between American Funds and Plaza Centers
Can any of the company-specific risk be diversified away by investing in both American Funds and Plaza Centers 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 Plaza Centers 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 Plaza Centers NV, you can compare the effects of market volatilities on American Funds and Plaza Centers 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 Plaza Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Plaza Centers.
Diversification Opportunities for American Funds and Plaza Centers
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Plaza is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Plaza Centers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Centers NV 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 Plaza Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Centers NV has no effect on the direction of American Funds i.e., American Funds and Plaza Centers go up and down completely randomly.
Pair Corralation between American Funds and Plaza Centers
Assuming the 90 days horizon American Funds is expected to generate 4.29 times less return on investment than Plaza Centers. But when comparing it to its historical volatility, American Funds Fundamental is 7.68 times less risky than Plaza Centers. It trades about 0.2 of its potential returns per unit of risk. Plaza Centers NV is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 12,500 in Plaza Centers NV on November 3, 2024 and sell it today you would earn a total of 1,380 from holding Plaza Centers NV or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Plaza Centers NV
Performance |
| Timeline |
| American Funds Funda |
| Plaza Centers NV |
American Funds and Plaza Centers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Plaza Centers
The main advantage of trading using opposite American Funds and Plaza Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Plaza Centers 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 Plaza Centers will offset losses from the drop in Plaza Centers' 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 |
| Plaza Centers vs. Spuntech | Plaza Centers vs. IDI Insurance | Plaza Centers vs. First International Bank | Plaza Centers vs. TAT Technologies |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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