Correlation Between American Funds and Edgar Lomax
Can any of the company-specific risk be diversified away by investing in both American Funds and Edgar Lomax 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 Edgar Lomax 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 Edgar Lomax Value, you can compare the effects of market volatilities on American Funds and Edgar Lomax 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 Edgar Lomax. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Edgar Lomax.
Diversification Opportunities for American Funds and Edgar Lomax
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Edgar is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Edgar Lomax Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgar Lomax Value 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 Edgar Lomax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgar Lomax Value has no effect on the direction of American Funds i.e., American Funds and Edgar Lomax go up and down completely randomly.
Pair Corralation between American Funds and Edgar Lomax
Assuming the 90 days horizon American Funds is expected to generate 2.42 times less return on investment than Edgar Lomax. But when comparing it to its historical volatility, American Funds American is 1.36 times less risky than Edgar Lomax. It trades about 0.09 of its potential returns per unit of risk. Edgar Lomax Value is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,593 in Edgar Lomax Value on August 27, 2024 and sell it today you would earn a total of 47.00 from holding Edgar Lomax Value or generate 2.95% 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. Edgar Lomax Value
Performance |
| Timeline |
| American Funds American |
| Edgar Lomax Value |
American Funds and Edgar Lomax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Edgar Lomax
The main advantage of trading using opposite American Funds and Edgar Lomax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Edgar Lomax 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 Edgar Lomax will offset losses from the drop in Edgar Lomax's long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| Edgar Lomax vs. Nationwide Small Cap | Edgar Lomax vs. Nationwide International Index | Edgar Lomax vs. Nationwide Mid Cap | Edgar Lomax vs. Nationwide Sp 500 |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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