Correlation Between Cognios Market and American Funds
Can any of the company-specific risk be diversified away by investing in both Cognios Market 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 Cognios Market and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognios Market Neutral and American Funds Fundamental, you can compare the effects of market volatilities on Cognios Market 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 Cognios Market with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognios Market and American Funds.
Diversification Opportunities for Cognios Market and American Funds
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognios and American is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cognios Market Neutral and American Funds Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Funda and Cognios Market 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 Cognios Market Neutral 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 Funda has no effect on the direction of Cognios Market i.e., Cognios Market and American Funds go up and down completely randomly.
Pair Corralation between Cognios Market and American Funds
Assuming the 90 days horizon Cognios Market Neutral is expected to under-perform the American Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, Cognios Market Neutral is 2.87 times less risky than American Funds. The mutual fund trades about -0.19 of its potential returns per unit of risk. The American Funds Fundamental is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 8,246 in American Funds Fundamental on October 25, 2024 and sell it today you would earn a total of 211.00 from holding American Funds Fundamental or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognios Market Neutral vs. American Funds Fundamental
Performance |
| Timeline |
| Cognios Market Neutral |
| American Funds Funda |
Cognios Market and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognios Market and American Funds
The main advantage of trading using opposite Cognios Market and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognios Market 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.| Cognios Market vs. T Rowe Price | Cognios Market vs. Metropolitan West Porate | Cognios Market vs. Old Westbury Municipal | Cognios Market vs. T Rowe Price |
| American Funds vs. Dws Emerging Markets | American Funds vs. Cognios Market Neutral | American Funds vs. Saat Market Growth | American Funds vs. Inverse 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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