Correlation Between American Funds and Retirement Choices
Can any of the company-specific risk be diversified away by investing in both American Funds and Retirement Choices 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 Retirement Choices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2025 and Retirement Choices At, you can compare the effects of market volatilities on American Funds and Retirement Choices 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 Retirement Choices. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Retirement Choices.
Diversification Opportunities for American Funds and Retirement Choices
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Retirement is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2025 and Retirement Choices At in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retirement Choices 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 2025 are associated (or correlated) with Retirement Choices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retirement Choices has no effect on the direction of American Funds i.e., American Funds and Retirement Choices go up and down completely randomly.
Pair Corralation between American Funds and Retirement Choices
Assuming the 90 days horizon American Funds 2025 is expected to generate 1.21 times more return on investment than Retirement Choices. However, American Funds is 1.21 times more volatile than Retirement Choices At. It trades about 0.09 of its potential returns per unit of risk. Retirement Choices At is currently generating about 0.06 per unit of risk. If you would invest 1,317 in American Funds 2025 on September 2, 2024 and sell it today you would earn a total of 287.00 from holding American Funds 2025 or generate 21.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.05% |
| Values | Daily Returns |
American Funds 2025 vs. Retirement Choices At
Performance |
| Timeline |
| American Funds 2025 |
| Retirement Choices |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Funds and Retirement Choices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Retirement Choices
The main advantage of trading using opposite American Funds and Retirement Choices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Retirement Choices 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 Retirement Choices will offset losses from the drop in Retirement Choices' long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| Retirement Choices vs. Tax Managed Large Cap | Retirement Choices vs. Large Cap Growth Profund | Retirement Choices vs. Touchstone Large Cap | Retirement Choices vs. American Mutual Fund |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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