Correlation Between Aam Select and American Funds
Can any of the company-specific risk be diversified away by investing in both Aam Select 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 Aam Select and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aam Select Income and American Funds Developing, you can compare the effects of market volatilities on Aam Select 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 Aam Select with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and American Funds.
Diversification Opportunities for Aam Select and American Funds
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aam and American is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and American Funds Developing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Developing and Aam Select 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 Aam Select Income 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 Developing has no effect on the direction of Aam Select i.e., Aam Select and American Funds go up and down completely randomly.
Pair Corralation between Aam Select and American Funds
Assuming the 90 days horizon Aam Select Income is expected to under-perform the American Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aam Select Income is 2.39 times less risky than American Funds. The mutual fund trades about -0.02 of its potential returns per unit of risk. The American Funds Developing is currently generating about 0.03 of returns per unit of risk over similar time horizon. 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 |
Aam Select Income vs. American Funds Developing
Performance |
| Timeline |
| Aam Select Income |
| American Funds Developing |
Aam Select and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aam Select and American Funds
The main advantage of trading using opposite Aam Select and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aam Select 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.| Aam Select vs. Needham Aggressive Growth | Aam Select vs. Western Asset High | Aam Select vs. Gmo High Yield | Aam Select vs. Nuveen High Income |
| American Funds vs. Aam Select Income | American Funds vs. Fa 529 Aggressive | American Funds vs. Volumetric Fund Volumetric | American Funds vs. Qs Large Cap |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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