Correlation Between American Funds and Mmzkx

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Can any of the company-specific risk be diversified away by investing in both American Funds and Mmzkx 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 Mmzkx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2065 and Mmzkx, you can compare the effects of market volatilities on American Funds and Mmzkx 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 Mmzkx. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Mmzkx.

Diversification Opportunities for American Funds and Mmzkx

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between American and Mmzkx is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2065 and Mmzkx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mmzkx 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 2065 are associated (or correlated) with Mmzkx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mmzkx has no effect on the direction of American Funds i.e., American Funds and Mmzkx go up and down completely randomly.

Pair Corralation between American Funds and Mmzkx

Assuming the 90 days horizon American Funds 2065 is expected to under-perform the Mmzkx. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds 2065 is 7.06 times less risky than Mmzkx. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Mmzkx is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,121  in Mmzkx on October 22, 2024 and sell it today you would earn a total of  154.00  from holding Mmzkx or generate 13.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

American Funds 2065  vs.  Mmzkx

 Performance 
       Timeline  
American Funds 2065 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days American Funds 2065 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Mmzkx 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Mmzkx are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Mmzkx may actually be approaching a critical reversion point that can send shares even higher in February 2025.

American Funds and Mmzkx Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Funds and Mmzkx

The main advantage of trading using opposite American Funds and Mmzkx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Mmzkx 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 Mmzkx will offset losses from the drop in Mmzkx's long position.
The idea behind American Funds 2065 and Mmzkx pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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