Correlation Between Ab International and American Funds
Can any of the company-specific risk be diversified away by investing in both Ab International and American Funds 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 Ab International and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab International Growth and American Funds Inflation, you can compare the effects of market volatilities on Ab International and American Funds 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 Ab International with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab International and American Funds.
Diversification Opportunities for Ab International and American Funds
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AWPIX and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ab International Growth and American Funds Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inflation and Ab International 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 Ab International Growth are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Inflation has no effect on the direction of Ab International i.e., Ab International and American Funds go up and down completely randomly.
Pair Corralation between Ab International and American Funds
Assuming the 90 days horizon Ab International Growth is expected to generate 2.17 times more return on investment than American Funds. However, Ab International is 2.17 times more volatile than American Funds Inflation. It trades about 0.04 of its potential returns per unit of risk. American Funds Inflation is currently generating about 0.02 per unit of risk. If you would invest 1,840 in Ab International Growth on August 31, 2024 and sell it today you would earn a total of 202.00 from holding Ab International Growth or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab International Growth vs. American Funds Inflation
Performance |
| Timeline |
| Ab International Growth |
| American Funds Inflation |
Ab International and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab International and American Funds
The main advantage of trading using opposite Ab International and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab International position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Ab International vs. American Funds Inflation | Ab International vs. Blackrock Inflation Protected | Ab International vs. Cref Inflation Linked Bond | Ab International vs. Ab Bond Inflation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |