Correlation Between American Funds and Pacific Funds
Can any of the company-specific risk be diversified away by investing in both American Funds and Pacific 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 American Funds and Pacific Funds 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 Pacific Funds Portfolio, you can compare the effects of market volatilities on American Funds and Pacific 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 American Funds with a short position of Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Pacific Funds.
Diversification Opportunities for American Funds and Pacific Funds
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Pacific is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Pacific Funds Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Portfolio 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Portfolio has no effect on the direction of American Funds i.e., American Funds and Pacific Funds go up and down completely randomly.
Pair Corralation between American Funds and Pacific Funds
Assuming the 90 days horizon American Funds American is expected to generate 1.06 times more return on investment than Pacific Funds. However, American Funds is 1.06 times more volatile than Pacific Funds Portfolio. It trades about 0.14 of its potential returns per unit of risk. Pacific Funds Portfolio is currently generating about 0.14 per unit of risk. If you would invest 3,352 in American Funds American on September 1, 2024 and sell it today you would earn a total of 343.00 from holding American Funds American or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Funds American vs. Pacific Funds Portfolio
Performance |
| Timeline |
| American Funds American |
| Pacific Funds Portfolio |
American Funds and Pacific Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Pacific Funds
The main advantage of trading using opposite American Funds and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Pacific 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 Pacific Funds will offset losses from the drop in Pacific Funds' long position.| American Funds vs. Calamos Dynamic Convertible | American Funds vs. Federated Ultrashort Bond | American Funds vs. Maryland Tax Free Bond | American Funds vs. Ambrus Core Bond |
| Pacific Funds vs. Pacific Funds Floating | Pacific Funds vs. Pacific Funds High | Pacific Funds vs. Pacific Funds Short | Pacific Funds vs. Pacific Funds Short |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |