Correlation Between American Funds and Guardian Fundamental
Can any of the company-specific risk be diversified away by investing in both American Funds and Guardian Fundamental 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 Guardian Fundamental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Guardian Fundamental Global, you can compare the effects of market volatilities on American Funds and Guardian Fundamental 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 Guardian Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Guardian Fundamental.
Diversification Opportunities for American Funds and Guardian Fundamental
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Guardian is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Guardian Fundamental Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Fundamental 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 New are associated (or correlated) with Guardian Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Fundamental has no effect on the direction of American Funds i.e., American Funds and Guardian Fundamental go up and down completely randomly.
Pair Corralation between American Funds and Guardian Fundamental
Assuming the 90 days horizon American Funds New is expected to generate 1.04 times more return on investment than Guardian Fundamental. However, American Funds is 1.04 times more volatile than Guardian Fundamental Global. It trades about 0.18 of its potential returns per unit of risk. Guardian Fundamental Global is currently generating about 0.18 per unit of risk. If you would invest 6,426 in American Funds New on September 1, 2024 and sell it today you would earn a total of 148.00 from holding American Funds New or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds New vs. Guardian Fundamental Global
Performance |
| Timeline |
| American Funds New |
| Guardian Fundamental |
American Funds and Guardian Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Guardian Fundamental
The main advantage of trading using opposite American Funds and Guardian Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Guardian Fundamental 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 Guardian Fundamental will offset losses from the drop in Guardian Fundamental's long position.| American Funds vs. Smallcap World Fund | American Funds vs. New World Fund | American Funds vs. New Perspective Fund | American Funds vs. Investment Of America |
| Guardian Fundamental vs. Guardian Dividend Growth | Guardian Fundamental vs. Equity Growth Fund | Guardian Fundamental vs. Putnam High Income | Guardian Fundamental vs. Fidelity Advisor Technology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |