Correlation Between American Funds and Applied Finance
Can any of the company-specific risk be diversified away by investing in both American Funds and Applied Finance 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 Applied Finance 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 Applied Finance Core, you can compare the effects of market volatilities on American Funds and Applied Finance 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 Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Applied Finance.
Diversification Opportunities for American Funds and Applied Finance
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Applied is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Applied Finance Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Core 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 Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Core has no effect on the direction of American Funds i.e., American Funds and Applied Finance go up and down completely randomly.
Pair Corralation between American Funds and Applied Finance
Assuming the 90 days horizon American Funds is expected to generate 1.05 times less return on investment than Applied Finance. But when comparing it to its historical volatility, American Funds American is 1.22 times less risky than Applied Finance. It trades about 0.12 of its potential returns per unit of risk. Applied Finance Core is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 967.00 in Applied Finance Core on August 31, 2024 and sell it today you would earn a total of 297.00 from holding Applied Finance Core or generate 30.71% 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. Applied Finance Core
Performance |
| Timeline |
| American Funds American |
| Applied Finance Core |
American Funds and Applied Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Applied Finance
The main advantage of trading using opposite American Funds and Applied Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Applied Finance 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 Applied Finance will offset losses from the drop in Applied Finance's long position.| American Funds vs. Columbia Real Estate | American Funds vs. Msif Real Estate | American Funds vs. Pender Real Estate | American Funds vs. Amg Managers Centersquare |
| Applied Finance vs. Icon Financial Fund | Applied Finance vs. Goldman Sachs Financial | Applied Finance vs. Prudential Jennison Financial | Applied Finance vs. Gabelli Global Financial |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |