Correlation Between American Funds and Arbitrage Credit
Can any of the company-specific risk be diversified away by investing in both American Funds and Arbitrage Credit 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 Arbitrage Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Inflation and The Arbitrage Credit, you can compare the effects of market volatilities on American Funds and Arbitrage Credit 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 Arbitrage Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Arbitrage Credit.
Diversification Opportunities for American Funds and Arbitrage Credit
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Arbitrage is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and The Arbitrage Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Credit 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 Inflation are associated (or correlated) with Arbitrage Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Credit has no effect on the direction of American Funds i.e., American Funds and Arbitrage Credit go up and down completely randomly.
Pair Corralation between American Funds and Arbitrage Credit
Assuming the 90 days horizon American Funds is expected to generate 2.2 times less return on investment than Arbitrage Credit. In addition to that, American Funds is 3.03 times more volatile than The Arbitrage Credit. It trades about 0.03 of its total potential returns per unit of risk. The Arbitrage Credit is currently generating about 0.18 per unit of volatility. If you would invest 868.00 in The Arbitrage Credit on September 14, 2024 and sell it today you would earn a total of 109.00 from holding The Arbitrage Credit or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Inflation vs. The Arbitrage Credit
Performance |
| Timeline |
| American Funds Inflation |
| Arbitrage Credit |
American Funds and Arbitrage Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Arbitrage Credit
The main advantage of trading using opposite American Funds and Arbitrage Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Arbitrage Credit 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 Arbitrage Credit will offset losses from the drop in Arbitrage Credit's long position.| American Funds vs. Putnam Convertible Incm Gwth | American Funds vs. Virtus Convertible | American Funds vs. Advent Claymore Convertible | American Funds vs. Rationalpier 88 Convertible |
| Arbitrage Credit vs. American Funds Inflation | Arbitrage Credit vs. Ab Bond Inflation | Arbitrage Credit vs. Ab Bond Inflation | Arbitrage Credit vs. Ab Bond Inflation |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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