Correlation Between Pro-blend(r) Maximum and American Funds
Can any of the company-specific risk be diversified away by investing in both Pro-blend(r) Maximum 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 Pro-blend(r) Maximum and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pro Blend Maximum Term and American Funds Growth, you can compare the effects of market volatilities on Pro-blend(r) Maximum 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 Pro-blend(r) Maximum with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro-blend(r) Maximum and American Funds.
Diversification Opportunities for Pro-blend(r) Maximum and American Funds
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pro-blend(r) and American is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Maximum Term and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth and Pro-blend(r) Maximum 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 Pro Blend Maximum Term 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 Growth has no effect on the direction of Pro-blend(r) Maximum i.e., Pro-blend(r) Maximum and American Funds go up and down completely randomly.
Pair Corralation between Pro-blend(r) Maximum and American Funds
Assuming the 90 days horizon Pro Blend Maximum Term is expected to generate 0.77 times more return on investment than American Funds. However, Pro Blend Maximum Term is 1.3 times less risky than American Funds. It trades about -0.13 of its potential returns per unit of risk. American Funds Growth is currently generating about -0.1 per unit of risk. If you would invest 2,601 in Pro Blend Maximum Term on November 28, 2024 and sell it today you would lose (41.00) from holding Pro Blend Maximum Term or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pro Blend Maximum Term vs. American Funds Growth
Performance |
| Timeline |
| Pro-blend(r) Maximum |
| American Funds Growth |
Pro-blend(r) Maximum and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pro-blend(r) Maximum and American Funds
The main advantage of trading using opposite Pro-blend(r) Maximum and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro-blend(r) Maximum 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.| Pro-blend(r) Maximum vs. Pro Blend Extended Term | Pro-blend(r) Maximum vs. Pro Blend Moderate Term | Pro-blend(r) Maximum vs. Pro Blend Servative Term | Pro-blend(r) Maximum vs. Large Cap Fund |
| American Funds vs. Ab Large Cap | American Funds vs. Blackrock Large Cap | American Funds vs. Touchstone Large Cap | American Funds vs. Legg Mason Partners |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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