Correlation Between World Core and American Funds
Can any of the company-specific risk be diversified away by investing in both World Core 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 World Core and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Core Equity and American Funds Capital, you can compare the effects of market volatilities on World Core 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 World Core with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Core and American Funds.
Diversification Opportunities for World Core and American Funds
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between World and American is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding World Core Equity and American Funds Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Capital and World Core 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 World Core Equity 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 Capital has no effect on the direction of World Core i.e., World Core and American Funds go up and down completely randomly.
Pair Corralation between World Core and American Funds
Assuming the 90 days horizon World Core Equity is expected to generate 1.01 times more return on investment than American Funds. However, World Core is 1.01 times more volatile than American Funds Capital. It trades about 0.09 of its potential returns per unit of risk. American Funds Capital is currently generating about 0.09 per unit of risk. If you would invest 2,043 in World Core Equity on September 12, 2024 and sell it today you would earn a total of 508.00 from holding World Core Equity or generate 24.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
World Core Equity vs. American Funds Capital
Performance |
| Timeline |
| World Core Equity |
| American Funds Capital |
World Core and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Core and American Funds
The main advantage of trading using opposite World Core and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Core 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.| World Core vs. Qs Growth Fund | World Core vs. Qs Defensive Growth | World Core vs. Smallcap Growth Fund | World Core vs. Ftfa Franklin Templeton Growth |
| American Funds vs. American Funds Capital | American Funds vs. Capital World Growth | American Funds vs. Capital World Growth | American Funds vs. Capital World Growth |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |