Correlation Between American Funds and Lsv Value
Can any of the company-specific risk be diversified away by investing in both American Funds and Lsv Value 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 Lsv Value 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 Lsv Value Equity, you can compare the effects of market volatilities on American Funds and Lsv Value 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 Lsv Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Lsv Value.
Diversification Opportunities for American Funds and Lsv Value
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Lsv is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Lsv Value Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Value Equity 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 Lsv Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Value Equity has no effect on the direction of American Funds i.e., American Funds and Lsv Value go up and down completely randomly.
Pair Corralation between American Funds and Lsv Value
Assuming the 90 days horizon American Funds American is expected to generate 0.58 times more return on investment than Lsv Value. However, American Funds American is 1.72 times less risky than Lsv Value. It trades about 0.09 of its potential returns per unit of risk. Lsv Value Equity is currently generating about 0.03 per unit of risk. If you would invest 4,690 in American Funds American on September 2, 2024 and sell it today you would earn a total of 1,369 from holding American Funds American or generate 29.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Lsv Value Equity
Performance |
| Timeline |
| American Funds American |
| Lsv Value Equity |
American Funds and Lsv Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Lsv Value
The main advantage of trading using opposite American Funds and Lsv Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Lsv Value 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 Lsv Value will offset losses from the drop in Lsv Value's long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| Lsv Value vs. Causeway Emerging Markets | Lsv Value vs. Loomis Sayles Growth | Lsv Value vs. Fidelity Sai Treasury | Lsv Value vs. Transamerica International Equity |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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