Correlation Between The National and American Funds
Can any of the company-specific risk be diversified away by investing in both The National 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 The National and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and American Funds Preservation, you can compare the effects of market volatilities on The National 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 The National with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of The National and American Funds.
Diversification Opportunities for The National and American Funds
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between The and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and American Funds Preservation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Prese and The National 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 The National Tax Free 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 Prese has no effect on the direction of The National i.e., The National and American Funds go up and down completely randomly.
Pair Corralation between The National and American Funds
Assuming the 90 days horizon The National Tax Free is expected to generate 1.93 times more return on investment than American Funds. However, The National is 1.93 times more volatile than American Funds Preservation. It trades about 0.2 of its potential returns per unit of risk. American Funds Preservation is currently generating about 0.0 per unit of risk. If you would invest 1,854 in The National Tax Free on August 31, 2024 and sell it today you would earn a total of 21.00 from holding The National Tax Free or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. American Funds Preservation
Performance |
| Timeline |
| National Tax |
| American Funds Prese |
The National and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The National and American Funds
The main advantage of trading using opposite The National and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National 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.| The National vs. Vanguard Intermediate Term Tax Exempt | The National vs. Vanguard Intermediate Term Tax Exempt | The National vs. Tax Exempt Bond | The National vs. Tax Exempt Bond |
| American Funds vs. Alliancebernstein National Municipal | American Funds vs. The National Tax Free | American Funds vs. Bbh Intermediate Municipal | American Funds vs. Nuveen Arizona Municipal |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |