Correlation Between American Funds and All Iron
Can any of the company-specific risk be diversified away by investing in both American Funds and All Iron 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 All Iron 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 All Iron Re, you can compare the effects of market volatilities on American Funds and All Iron 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 All Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and All Iron.
Diversification Opportunities for American Funds and All Iron
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and All is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and All Iron Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Iron Re 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 All Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Iron Re has no effect on the direction of American Funds i.e., American Funds and All Iron go up and down completely randomly.
Pair Corralation between American Funds and All Iron
Assuming the 90 days horizon American Funds Fundamental is expected to generate 3.73 times more return on investment than All Iron. However, American Funds is 3.73 times more volatile than All Iron Re. It trades about 0.2 of its potential returns per unit of risk. All Iron Re is currently generating about 0.3 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 | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
American Funds Fundamental vs. All Iron Re
Performance |
| Timeline |
| American Funds Funda |
| All Iron Re |
American Funds and All Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and All Iron
The main advantage of trading using opposite American Funds and All Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, All Iron 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 All Iron will offset losses from the drop in All Iron'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 |
| All Iron vs. Tier1 Technology SA | All Iron vs. Naturhouse Health SA | All Iron vs. Inhome Prime Properties | All Iron vs. Plasticos Compuestos SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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