Correlation Between American Funds and Simt Tax-managed
Can any of the company-specific risk be diversified away by investing in both American Funds and Simt Tax-managed 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 Simt Tax-managed 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 Simt Tax Managed Managed, you can compare the effects of market volatilities on American Funds and Simt Tax-managed 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 Simt Tax-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Simt Tax-managed.
Diversification Opportunities for American Funds and Simt Tax-managed
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Simt is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Simt Tax Managed Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed 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 Simt Tax-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Tax Managed has no effect on the direction of American Funds i.e., American Funds and Simt Tax-managed go up and down completely randomly.
Pair Corralation between American Funds and Simt Tax-managed
Assuming the 90 days horizon American Funds American is expected to generate 0.68 times more return on investment than Simt Tax-managed. However, American Funds American is 1.46 times less risky than Simt Tax-managed. It trades about 0.09 of its potential returns per unit of risk. Simt Tax Managed Managed is currently generating about 0.02 per unit of risk. If you would invest 4,630 in American Funds American on August 30, 2024 and sell it today you would earn a total of 1,416 from holding American Funds American or generate 30.58% 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. Simt Tax Managed Managed
Performance |
| Timeline |
| American Funds American |
| Simt Tax Managed |
American Funds and Simt Tax-managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Simt Tax-managed
The main advantage of trading using opposite American Funds and Simt Tax-managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Simt Tax-managed 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 Simt Tax-managed will offset losses from the drop in Simt Tax-managed's long position.| American Funds vs. Ishares Municipal Bond | American Funds vs. Transamerica Intermediate Muni | American Funds vs. Baird Strategic Municipal | American Funds vs. Federated Government Ultrashort |
| Simt Tax-managed vs. Dodge Cox Stock | Simt Tax-managed vs. American Mutual Fund | Simt Tax-managed vs. American Funds American | Simt Tax-managed vs. American Funds American |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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