Correlation Between American Funds and American High
Can any of the company-specific risk be diversified away by investing in both American Funds and American High 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 American Funds and American High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and American High Income, you can compare the effects of market volatilities on American Funds and American High 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 American Funds with a short position of American High. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and American High.
Diversification Opportunities for American Funds and American High
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and American is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and American High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income and American Funds 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 American Funds American are associated (or correlated) with American High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of American Funds i.e., American Funds and American High go up and down completely randomly.
Pair Corralation between American Funds and American High
Assuming the 90 days horizon American Funds American is expected to generate 1.02 times more return on investment than American High. However, American Funds is 1.02 times more volatile than American High Income. It trades about 0.14 of its potential returns per unit of risk. American High Income is currently generating about 0.13 per unit of risk. If you would invest 806.00 in American Funds American on September 2, 2024 and sell it today you would earn a total of 179.00 from holding American Funds American or generate 22.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. American High Income
Performance |
| Timeline |
| American Funds American |
| American High Income |
American Funds and American High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and American High
The main advantage of trading using opposite American Funds and American High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, American High 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 High will offset losses from the drop in American High's long position.| American Funds vs. Ab Bond Inflation | American Funds vs. Calamos Dynamic Convertible | American Funds vs. Versatile Bond Portfolio | American Funds vs. Ultra Short Fixed Income |
| American High vs. Touchstone Premium Yield | American High vs. Calamos Dynamic Convertible | American High vs. Ft 7934 Corporate | American High vs. Ms Global Fixed |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |