Correlation Between American Funds and Gotham Enhanced
Can any of the company-specific risk be diversified away by investing in both American Funds and Gotham Enhanced 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 Gotham Enhanced 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 Gotham Enhanced 500, you can compare the effects of market volatilities on American Funds and Gotham Enhanced 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 Gotham Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Gotham Enhanced.
Diversification Opportunities for American Funds and Gotham Enhanced
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Gotham is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Gotham Enhanced 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Enhanced 500 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 Gotham Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Enhanced 500 has no effect on the direction of American Funds i.e., American Funds and Gotham Enhanced go up and down completely randomly.
Pair Corralation between American Funds and Gotham Enhanced
Assuming the 90 days horizon American Funds American is expected to generate 0.78 times more return on investment than Gotham Enhanced. However, American Funds American is 1.28 times less risky than Gotham Enhanced. It trades about 0.08 of its potential returns per unit of risk. Gotham Enhanced 500 is currently generating about -0.02 per unit of risk. If you would invest 5,739 in American Funds American on November 28, 2024 and sell it today you would earn a total of 44.00 from holding American Funds American or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Gotham Enhanced 500
Performance |
| Timeline |
| American Funds American |
| Gotham Enhanced 500 |
American Funds and Gotham Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Gotham Enhanced
The main advantage of trading using opposite American Funds and Gotham Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Gotham Enhanced 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 Gotham Enhanced will offset losses from the drop in Gotham Enhanced's long position.| American Funds vs. Multisector Bond Sma | American Funds vs. Buffalo High Yield | American Funds vs. Nationwide E Plus | American Funds vs. T Rowe Price |
| Gotham Enhanced vs. Small Pany Growth | Gotham Enhanced vs. Intal High Relative | Gotham Enhanced vs. Alternative Asset Allocation | Gotham Enhanced vs. Arrow Managed Futures |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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