Correlation Between American Funds and Equity Growth
Can any of the company-specific risk be diversified away by investing in both American Funds and Equity Growth 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 Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds The and Equity Growth Strategy, you can compare the effects of market volatilities on American Funds and Equity Growth 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 Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Equity Growth.
Diversification Opportunities for American Funds and Equity Growth
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Equity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Equity Growth Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth Strategy 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 The are associated (or correlated) with Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth Strategy has no effect on the direction of American Funds i.e., American Funds and Equity Growth go up and down completely randomly.
Pair Corralation between American Funds and Equity Growth
Assuming the 90 days horizon American Funds The is expected to generate 0.64 times more return on investment than Equity Growth. However, American Funds The is 1.56 times less risky than Equity Growth. It trades about 0.17 of its potential returns per unit of risk. Equity Growth Strategy is currently generating about 0.09 per unit of risk. If you would invest 2,393 in American Funds The on September 3, 2024 and sell it today you would earn a total of 236.00 from holding American Funds The or generate 9.86% 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 The vs. Equity Growth Strategy
Performance |
| Timeline |
| American Funds |
| Equity Growth Strategy |
American Funds and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Equity Growth
The main advantage of trading using opposite American Funds and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| American Funds vs. American Funds The | American Funds vs. Income Fund Of | American Funds vs. Income Fund Of | American Funds vs. Income Fund Of |
| Equity Growth vs. American Funds The | Equity Growth vs. American Funds The | Equity Growth vs. Income Fund Of | Equity Growth vs. Income Fund Of |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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