Correlation Between American Funds and Loomis Sayles
Can any of the company-specific risk be diversified away by investing in both American Funds and Loomis Sayles 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 Loomis Sayles 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 Loomis Sayles Inflation, you can compare the effects of market volatilities on American Funds and Loomis Sayles 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 Loomis Sayles. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Loomis Sayles.
Diversification Opportunities for American Funds and Loomis Sayles
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Loomis is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Loomis Sayles Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Inflation 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 Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Inflation has no effect on the direction of American Funds i.e., American Funds and Loomis Sayles go up and down completely randomly.
Pair Corralation between American Funds and Loomis Sayles
Assuming the 90 days horizon American Funds American is expected to generate 1.62 times more return on investment than Loomis Sayles. However, American Funds is 1.62 times more volatile than Loomis Sayles Inflation. It trades about 0.04 of its potential returns per unit of risk. Loomis Sayles Inflation is currently generating about 0.04 per unit of risk. If you would invest 5,909 in American Funds American on September 19, 2024 and sell it today you would earn a total of 20.00 from holding American Funds American or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Loomis Sayles Inflation
Performance |
| Timeline |
| American Funds American |
| Loomis Sayles Inflation |
American Funds and Loomis Sayles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Loomis Sayles
The main advantage of trading using opposite American Funds and Loomis Sayles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Loomis Sayles 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 Loomis Sayles will offset losses from the drop in Loomis Sayles' long position.| American Funds vs. Century Small Cap | American Funds vs. Qs Growth Fund | American Funds vs. Small Cap Stock | American Funds vs. Eic Value Fund |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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