Correlation Between Black Oak and American Funds
Can any of the company-specific risk be diversified away by investing in both Black Oak 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 Black Oak and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Oak Emerging and American Funds Growth, you can compare the effects of market volatilities on Black Oak 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 Black Oak with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Oak and American Funds.
Diversification Opportunities for Black Oak and American Funds
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Black and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Black Oak Emerging and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth and Black Oak 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 Black Oak Emerging 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 Growth has no effect on the direction of Black Oak i.e., Black Oak and American Funds go up and down completely randomly.
Pair Corralation between Black Oak and American Funds
Assuming the 90 days horizon Black Oak is expected to generate 1.18 times less return on investment than American Funds. In addition to that, Black Oak is 1.58 times more volatile than American Funds Growth. It trades about 0.06 of its total potential returns per unit of risk. American Funds Growth is currently generating about 0.1 per unit of volatility. If you would invest 2,443 in American Funds Growth on August 30, 2024 and sell it today you would earn a total of 300.00 from holding American Funds Growth or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Oak Emerging vs. American Funds Growth
Performance |
| Timeline |
| Black Oak Emerging |
| American Funds Growth |
Black Oak and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Oak and American Funds
The main advantage of trading using opposite Black Oak and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Oak 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.| Black Oak vs. Red Oak Technology | Black Oak vs. Pin Oak Equity | Black Oak vs. Live Oak Health | Black Oak vs. Berkshire Focus |
| American Funds vs. Dodge Cox Emerging | American Funds vs. Black Oak Emerging | American Funds vs. Arrow Managed Futures | American Funds vs. Ep Emerging Markets |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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