Correlation Between American Funds and Poplar Forest
Can any of the company-specific risk be diversified away by investing in both American Funds and Poplar Forest 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 Poplar Forest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds The and Poplar Forest Nerstone, you can compare the effects of market volatilities on American Funds and Poplar Forest 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 Poplar Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Poplar Forest.
Diversification Opportunities for American Funds and Poplar Forest
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Poplar is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Poplar Forest Nerstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poplar Forest Nerstone 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 The are associated (or correlated) with Poplar Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poplar Forest Nerstone has no effect on the direction of American Funds i.e., American Funds and Poplar Forest go up and down completely randomly.
Pair Corralation between American Funds and Poplar Forest
Assuming the 90 days horizon American Funds is expected to generate 3.34 times less return on investment than Poplar Forest. But when comparing it to its historical volatility, American Funds The is 1.37 times less risky than Poplar Forest. It trades about 0.12 of its potential returns per unit of risk. Poplar Forest Nerstone is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,010 in Poplar Forest Nerstone on August 30, 2024 and sell it today you would earn a total of 115.00 from holding Poplar Forest Nerstone or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds The vs. Poplar Forest Nerstone
Performance |
| Timeline |
| American Funds |
| Poplar Forest Nerstone |
American Funds and Poplar Forest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Poplar Forest
The main advantage of trading using opposite American Funds and Poplar Forest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Poplar Forest 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 Poplar Forest will offset losses from the drop in Poplar Forest's long position.| American Funds vs. Fidelity Sai Convertible | American Funds vs. Calamos Dynamic Convertible | American Funds vs. Gabelli Convertible And | American Funds vs. Absolute Convertible Arbitrage |
| Poplar Forest vs. Poplar Forest Partners | Poplar Forest vs. Poplar Forest Partners | Poplar Forest vs. Small Cap Value | Poplar Forest vs. Gabelli Equity Trust |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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