Correlation Between American Funds and Sierra Tactical
Can any of the company-specific risk be diversified away by investing in both American Funds and Sierra Tactical 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 Sierra Tactical 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 Sierra Tactical Risk, you can compare the effects of market volatilities on American Funds and Sierra Tactical 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 Sierra Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Sierra Tactical.
Diversification Opportunities for American Funds and Sierra Tactical
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Sierra is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Sierra Tactical Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Tactical Risk 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 Sierra Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Tactical Risk has no effect on the direction of American Funds i.e., American Funds and Sierra Tactical go up and down completely randomly.
Pair Corralation between American Funds and Sierra Tactical
Assuming the 90 days horizon American Funds American is expected to generate 1.1 times more return on investment than Sierra Tactical. However, American Funds is 1.1 times more volatile than Sierra Tactical Risk. It trades about 0.09 of its potential returns per unit of risk. Sierra Tactical Risk is currently generating about 0.08 per unit of risk. If you would invest 3,113 in American Funds American on November 9, 2024 and sell it today you would earn a total of 455.00 from holding American Funds American or generate 14.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
American Funds American vs. Sierra Tactical Risk
Performance |
| Timeline |
| American Funds American |
| Sierra Tactical Risk |
American Funds and Sierra Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Sierra Tactical
The main advantage of trading using opposite American Funds and Sierra Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Sierra Tactical 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 Sierra Tactical will offset losses from the drop in Sierra Tactical's long position.| American Funds vs. Franklin Lifesmart Retirement | American Funds vs. Columbia Moderate Growth | American Funds vs. Moderate Duration Fund | American Funds vs. Putnman Retirement Ready |
| Sierra Tactical vs. Sierra E Retirement | Sierra Tactical vs. Sierra E Retirement | Sierra Tactical vs. Sierra E Retirement | Sierra Tactical vs. Sierra E Retirement |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |