Correlation Between American Funds and Al Frank
Can any of the company-specific risk be diversified away by investing in both American Funds and Al Frank 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 Al Frank 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 Al Frank Fund, you can compare the effects of market volatilities on American Funds and Al Frank 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 Al Frank. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Al Frank.
Diversification Opportunities for American Funds and Al Frank
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and VALAX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Al Frank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Frank Fund 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 Al Frank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Frank Fund has no effect on the direction of American Funds i.e., American Funds and Al Frank go up and down completely randomly.
Pair Corralation between American Funds and Al Frank
Assuming the 90 days horizon American Funds American is expected to generate 0.72 times more return on investment than Al Frank. However, American Funds American is 1.4 times less risky than Al Frank. It trades about 0.17 of its potential returns per unit of risk. Al Frank Fund is currently generating about 0.11 per unit of risk. If you would invest 5,372 in American Funds American on September 3, 2024 and sell it today you would earn a total of 687.00 from holding American Funds American or generate 12.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Al Frank Fund
Performance |
| Timeline |
| American Funds American |
| Al Frank Fund |
American Funds and Al Frank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Al Frank
The main advantage of trading using opposite American Funds and Al Frank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Al Frank 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 Al Frank will offset losses from the drop in Al Frank's long position.| American Funds vs. Ab Government Exchange | American Funds vs. Inverse Government Long | American Funds vs. Us Government Securities | American Funds vs. Franklin Adjustable Government |
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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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