Correlation Between American Funds and Southern Arc
Can any of the company-specific risk be diversified away by investing in both American Funds and Southern Arc 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 Southern Arc 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 Southern Arc Minerals, you can compare the effects of market volatilities on American Funds and Southern Arc 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 Southern Arc. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Southern Arc.
Diversification Opportunities for American Funds and Southern Arc
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Southern is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Southern Arc Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Arc Minerals 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 Southern Arc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Arc Minerals has no effect on the direction of American Funds i.e., American Funds and Southern Arc go up and down completely randomly.
Pair Corralation between American Funds and Southern Arc
Assuming the 90 days horizon American Funds Fundamental is expected to generate 10.16 times more return on investment than Southern Arc. However, American Funds is 10.16 times more volatile than Southern Arc Minerals. It trades about 0.2 of its potential returns per unit of risk. Southern Arc Minerals is currently generating about -0.22 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Southern Arc Minerals
Performance |
| Timeline |
| American Funds Funda |
| Southern Arc Minerals |
American Funds and Southern Arc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Southern Arc
The main advantage of trading using opposite American Funds and Southern Arc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Southern Arc 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 Southern Arc will offset losses from the drop in Southern Arc'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 |
| Southern Arc vs. Gladstone Investment | Southern Arc vs. NETGEAR | Southern Arc vs. Ameriprise Financial | Southern Arc vs. Arrow Electronics |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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