Correlation Between American Funds and Sampo Oyj
Can any of the company-specific risk be diversified away by investing in both American Funds and Sampo Oyj 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 Sampo Oyj 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 Sampo Oyj A, you can compare the effects of market volatilities on American Funds and Sampo Oyj 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 Sampo Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Sampo Oyj.
Diversification Opportunities for American Funds and Sampo Oyj
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Sampo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Sampo Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo Oyj A 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 Sampo Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sampo Oyj A has no effect on the direction of American Funds i.e., American Funds and Sampo Oyj go up and down completely randomly.
Pair Corralation between American Funds and Sampo Oyj
Assuming the 90 days horizon American Funds Fundamental is expected to generate 1.07 times more return on investment than Sampo Oyj. However, American Funds is 1.07 times more volatile than Sampo Oyj A. It trades about 0.2 of its potential returns per unit of risk. Sampo Oyj A is currently generating about 0.01 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 | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds Fundamental vs. Sampo Oyj A
Performance |
| Timeline |
| American Funds Funda |
| Sampo Oyj A |
American Funds and Sampo Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Sampo Oyj
The main advantage of trading using opposite American Funds and Sampo Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Sampo Oyj 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 Sampo Oyj will offset losses from the drop in Sampo Oyj's 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 |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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