Correlation Between American Funds and Aam Select
Can any of the company-specific risk be diversified away by investing in both American Funds and Aam Select 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 Aam Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Developing and Aam Select Income, you can compare the effects of market volatilities on American Funds and Aam Select 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 Aam Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Aam Select.
Diversification Opportunities for American Funds and Aam Select
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Aam is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Developing and Aam Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aam Select Income 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 Developing are associated (or correlated) with Aam Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aam Select Income has no effect on the direction of American Funds i.e., American Funds and Aam Select go up and down completely randomly.
Pair Corralation between American Funds and Aam Select
Assuming the 90 days horizon American Funds Developing is expected to generate 2.39 times more return on investment than Aam Select. However, American Funds is 2.39 times more volatile than Aam Select Income. It trades about 0.03 of its potential returns per unit of risk. Aam Select Income is currently generating about -0.02 per unit of risk. If you would invest 1,044 in American Funds Developing on September 3, 2024 and sell it today you would earn a total of 15.00 from holding American Funds Developing or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Developing vs. Aam Select Income
Performance |
| Timeline |
| American Funds Developing |
| Aam Select Income |
American Funds and Aam Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Aam Select
The main advantage of trading using opposite American Funds and Aam Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Aam Select 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 Aam Select will offset losses from the drop in Aam Select's long position.| American Funds vs. Aam Select Income | American Funds vs. Fa 529 Aggressive | American Funds vs. Volumetric Fund Volumetric | American Funds vs. Qs Large Cap |
| Aam Select vs. Needham Aggressive Growth | Aam Select vs. Western Asset High | Aam Select vs. Gmo High Yield | Aam Select vs. Nuveen High Income |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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