Correlation Between American Funds and Us Global
Can any of the company-specific risk be diversified away by investing in both American Funds and Us Global 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 Us Global 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 Us Global Leaders, you can compare the effects of market volatilities on American Funds and Us Global 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 Us Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Us Global.
Diversification Opportunities for American Funds and Us Global
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and USGLX is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Us Global Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Global Leaders 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 Us Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Global Leaders has no effect on the direction of American Funds i.e., American Funds and Us Global go up and down completely randomly.
Pair Corralation between American Funds and Us Global
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.9 times more return on investment than Us Global. However, American Funds Fundamental is 1.11 times less risky than Us Global. It trades about 0.06 of its potential returns per unit of risk. Us Global Leaders is currently generating about 0.01 per unit of risk. If you would invest 7,352 in American Funds Fundamental on November 3, 2024 and sell it today you would earn a total of 1,066 from holding American Funds Fundamental or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
American Funds Fundamental vs. Us Global Leaders
Performance |
| Timeline |
| American Funds Funda |
| Us Global Leaders |
American Funds and Us Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Us Global
The main advantage of trading using opposite American Funds and Us Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Us Global 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 Us Global will offset losses from the drop in Us Global'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 |
| Us Global vs. Icon Information Technology | Us Global vs. Columbia Global Technology | Us Global vs. Hennessy Technology Fund | Us Global vs. Pgim Jennison Technology |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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