Correlation Between American Funds and Tactical Growth
Can any of the company-specific risk be diversified away by investing in both American Funds and Tactical Growth 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 Tactical Growth 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 Tactical Growth Allocation, you can compare the effects of market volatilities on American Funds and Tactical Growth 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 Tactical Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Tactical Growth.
Diversification Opportunities for American Funds and Tactical Growth
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Tactical is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Growth and Tactical Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tactical Growth Allo 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 Tactical Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tactical Growth Allo has no effect on the direction of American Funds i.e., American Funds and Tactical Growth go up and down completely randomly.
Pair Corralation between American Funds and Tactical Growth
Assuming the 90 days horizon American Funds Growth is expected to under-perform the Tactical Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds Growth is 1.02 times less risky than Tactical Growth. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Tactical Growth Allocation is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,167 in Tactical Growth Allocation on November 28, 2024 and sell it today you would lose (8.00) from holding Tactical Growth Allocation or give up 0.69% 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. Tactical Growth Allocation
Performance |
| Timeline |
| American Funds Growth |
| Tactical Growth Allo |
American Funds and Tactical Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Tactical Growth
The main advantage of trading using opposite American Funds and Tactical Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Tactical Growth 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 Tactical Growth will offset losses from the drop in Tactical Growth'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 |
| Tactical Growth vs. The Hartford Servative | Tactical Growth vs. T Rowe Price | Tactical Growth vs. Balanced Allocation Fund | Tactical Growth vs. Washington Mutual Investors |
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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