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 Retirement, 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
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aam and American is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and American Funds Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Retirement 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 Retirement 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 is expected to generate 1.52 times less return on investment than American Funds. In addition to that, Aam Select is 1.23 times more volatile than American Funds Retirement. It trades about 0.12 of its total potential returns per unit of risk. American Funds Retirement is currently generating about 0.23 per unit of volatility. If you would invest 1,188 in American Funds Retirement on September 4, 2024 and sell it today you would earn a total of 17.00 from holding American Funds Retirement or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Aam Select Income vs. American Funds Retirement
Performance |
| Timeline |
| Aam Select Income |
| American Funds Retirement |
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. Dreyfusstandish Global Fixed | Aam Select vs. Ab Impact Municipal | Aam Select vs. T Rowe Price | Aam Select vs. Multisector Bond Sma |
| American Funds vs. Volumetric Fund Volumetric | American Funds vs. Fabxx | American Funds vs. Aam Select Income | American Funds vs. Falcon Focus Scv |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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