Correlation Between Elfun Diversified and American Funds
Can any of the company-specific risk be diversified away by investing in both Elfun Diversified 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 Elfun Diversified and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Diversified Fund and American Funds Inflation, you can compare the effects of market volatilities on Elfun Diversified 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 Elfun Diversified with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Diversified and American Funds.
Diversification Opportunities for Elfun Diversified and American Funds
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elfun and American is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Diversified Fund and American Funds Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inflation and Elfun Diversified 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 Elfun Diversified Fund 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 Inflation has no effect on the direction of Elfun Diversified i.e., Elfun Diversified and American Funds go up and down completely randomly.
Pair Corralation between Elfun Diversified and American Funds
Assuming the 90 days horizon Elfun Diversified Fund is expected to generate 1.36 times more return on investment than American Funds. However, Elfun Diversified is 1.36 times more volatile than American Funds Inflation. It trades about 0.1 of its potential returns per unit of risk. American Funds Inflation is currently generating about 0.02 per unit of risk. If you would invest 1,659 in Elfun Diversified Fund on September 20, 2024 and sell it today you would earn a total of 492.00 from holding Elfun Diversified Fund or generate 29.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elfun Diversified Fund vs. American Funds Inflation
Performance |
| Timeline |
| Elfun Diversified |
| American Funds Inflation |
Elfun Diversified and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elfun Diversified and American Funds
The main advantage of trading using opposite Elfun Diversified and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Diversified 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.| Elfun Diversified vs. State Street Target | Elfun Diversified vs. State Street Target | Elfun Diversified vs. Ssga International Stock | Elfun Diversified vs. State Street Target |
| American Funds vs. Prudential Core Conservative | American Funds vs. Elfun Diversified Fund | American Funds vs. Guggenheim Diversified Income | American Funds vs. Delaware Limited Term Diversified |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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