Correlation Between American Funds and Ab Global
Can any of the company-specific risk be diversified away by investing in both American Funds and Ab Global 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 Ab Global 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 Ab Global Risk, you can compare the effects of market volatilities on American Funds and Ab Global 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 Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Ab Global.
Diversification Opportunities for American Funds and Ab Global
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and CBSYX is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Ab Global Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global 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 Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Risk has no effect on the direction of American Funds i.e., American Funds and Ab Global go up and down completely randomly.
Pair Corralation between American Funds and Ab Global
Assuming the 90 days horizon American Funds American is expected to generate 1.48 times more return on investment than Ab Global. However, American Funds is 1.48 times more volatile than Ab Global Risk. It trades about 0.04 of its potential returns per unit of risk. Ab Global Risk is currently generating about 0.02 per unit of risk. If you would invest 5,928 in American Funds American on August 25, 2024 and sell it today you would earn a total of 32.00 from holding American Funds American or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Funds American vs. Ab Global Risk
Performance |
| Timeline |
| American Funds American |
| Ab Global Risk |
American Funds and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Ab Global
The main advantage of trading using opposite American Funds and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Ab Global 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 Ab Global will offset losses from the drop in Ab Global's long position.| American Funds vs. California High Yield Municipal | American Funds vs. Victory High Income | American Funds vs. Morningstar Aggressive Growth | American Funds vs. Ab Global Risk |
| Ab Global vs. Ab Global E | Ab Global vs. Ab Global E | Ab Global vs. Ab Global E | Ab Global vs. Ab Minnesota Portfolio |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |