Correlation Between American Funds and Bts Managed
Can any of the company-specific risk be diversified away by investing in both American Funds and Bts Managed 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 Bts Managed 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 Bts Managed Income, you can compare the effects of market volatilities on American Funds and Bts Managed 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 Bts Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Bts Managed.
Diversification Opportunities for American Funds and Bts Managed
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Bts is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and Bts Managed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bts Managed Income 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 Bts Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bts Managed Income has no effect on the direction of American Funds i.e., American Funds and Bts Managed go up and down completely randomly.
Pair Corralation between American Funds and Bts Managed
Assuming the 90 days horizon American Funds is expected to generate 1.85 times less return on investment than Bts Managed. In addition to that, American Funds is 1.21 times more volatile than Bts Managed Income. It trades about 0.09 of its total potential returns per unit of risk. Bts Managed Income is currently generating about 0.2 per unit of volatility. If you would invest 932.00 in Bts Managed Income on September 3, 2024 and sell it today you would earn a total of 52.00 from holding Bts Managed Income or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Inflation vs. Bts Managed Income
Performance |
| Timeline |
| American Funds Inflation |
| Bts Managed Income |
American Funds and Bts Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Bts Managed
The main advantage of trading using opposite American Funds and Bts Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Bts Managed 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 Bts Managed will offset losses from the drop in Bts Managed's long position.| American Funds vs. Royce Opportunity Fund | American Funds vs. Columbia Small Cap | American Funds vs. Ab Discovery Value | American Funds vs. Pace Smallmedium Value |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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