Correlation Between American Funds and Sands Capital
Can any of the company-specific risk be diversified away by investing in both American Funds and Sands Capital 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 Sands Capital 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 Sands Capital Global, you can compare the effects of market volatilities on American Funds and Sands Capital 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 Sands Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Sands Capital.
Diversification Opportunities for American Funds and Sands Capital
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Sands is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Sands Capital Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sands Capital Global 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 Sands Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sands Capital Global has no effect on the direction of American Funds i.e., American Funds and Sands Capital go up and down completely randomly.
Pair Corralation between American Funds and Sands Capital
Assuming the 90 days horizon American Funds New is expected to generate 0.58 times more return on investment than Sands Capital. However, American Funds New is 1.72 times less risky than Sands Capital. It trades about 0.01 of its potential returns per unit of risk. Sands Capital Global is currently generating about 0.0 per unit of risk. If you would invest 6,408 in American Funds New on November 28, 2024 and sell it today you would earn a total of 4.00 from holding American Funds New or generate 0.06% 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 New vs. Sands Capital Global
Performance |
| Timeline |
| American Funds New |
| Sands Capital Global |
American Funds and Sands Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Sands Capital
The main advantage of trading using opposite American Funds and Sands Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Sands Capital 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 Sands Capital will offset losses from the drop in Sands Capital's long position.| American Funds vs. Versatile Bond Portfolio | American Funds vs. Gmo Quality Fund | American Funds vs. T Rowe Price | American Funds vs. Barings Active Short |
| Sands Capital vs. Sands Capital Global | Sands Capital vs. Invesco Disciplined Equity | Sands Capital vs. Global Advantage Portfolio | Sands Capital vs. Global Opportunity Portfolio |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |