Correlation Between American Funds and Pro-blend(r) Maximum
Can any of the company-specific risk be diversified away by investing in both American Funds and Pro-blend(r) Maximum 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 Pro-blend(r) Maximum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Growth and Pro Blend Maximum Term, you can compare the effects of market volatilities on American Funds and Pro-blend(r) Maximum 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 Pro-blend(r) Maximum. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Pro-blend(r) Maximum.
Diversification Opportunities for American Funds and Pro-blend(r) Maximum
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Pro-blend(r) is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Growth and Pro Blend Maximum Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro-blend(r) Maximum 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 Growth are associated (or correlated) with Pro-blend(r) Maximum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro-blend(r) Maximum has no effect on the direction of American Funds i.e., American Funds and Pro-blend(r) Maximum go up and down completely randomly.
Pair Corralation between American Funds and Pro-blend(r) Maximum
Assuming the 90 days horizon American Funds Growth is expected to under-perform the Pro-blend(r) Maximum. In addition to that, American Funds is 1.3 times more volatile than Pro Blend Maximum Term. It trades about -0.1 of its total potential returns per unit of risk. Pro Blend Maximum Term is currently generating about -0.13 per unit of volatility. If you would invest 2,601 in Pro Blend Maximum Term on November 28, 2024 and sell it today you would lose (41.00) from holding Pro Blend Maximum Term or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Growth vs. Pro Blend Maximum Term
Performance |
| Timeline |
| American Funds Growth |
| Pro-blend(r) Maximum |
American Funds and Pro-blend(r) Maximum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Pro-blend(r) Maximum
The main advantage of trading using opposite American Funds and Pro-blend(r) Maximum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Pro-blend(r) Maximum 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 Pro-blend(r) Maximum will offset losses from the drop in Pro-blend(r) Maximum's long position.| American Funds vs. T Rowe Price | American Funds vs. Ashmore Emerging Markets | American Funds vs. Inverse Mid Cap Strategy | American Funds vs. T Rowe Price |
| Pro-blend(r) Maximum vs. Pro Blend Extended Term | Pro-blend(r) Maximum vs. Pro Blend Moderate Term | Pro-blend(r) Maximum vs. Pro Blend Servative Term | Pro-blend(r) Maximum vs. Large Cap Fund |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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