Correlation Between American Funds and Swan Defined
Can any of the company-specific risk be diversified away by investing in both American Funds and Swan Defined 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 Swan Defined 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 Swan Defined Risk, you can compare the effects of market volatilities on American Funds and Swan Defined 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 Swan Defined. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Swan Defined.
Diversification Opportunities for American Funds and Swan Defined
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Swan is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and Swan Defined Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swan Defined Risk 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 Swan Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swan Defined Risk has no effect on the direction of American Funds i.e., American Funds and Swan Defined go up and down completely randomly.
Pair Corralation between American Funds and Swan Defined
Assuming the 90 days horizon American Funds Inflation is expected to generate 0.51 times more return on investment than Swan Defined. However, American Funds Inflation is 1.96 times less risky than Swan Defined. It trades about 0.27 of its potential returns per unit of risk. Swan Defined Risk is currently generating about -0.06 per unit of risk. If you would invest 920.00 in American Funds Inflation on November 28, 2024 and sell it today you would earn a total of 13.00 from holding American Funds Inflation or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Inflation vs. Swan Defined Risk
Performance |
| Timeline |
| American Funds Inflation |
| Swan Defined Risk |
American Funds and Swan Defined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Swan Defined
The main advantage of trading using opposite American Funds and Swan Defined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Swan Defined 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 Swan Defined will offset losses from the drop in Swan Defined's long position.| American Funds vs. Ab High Income | American Funds vs. Barings High Yield | American Funds vs. Pioneer High Income | American Funds vs. Ab High Income |
| Swan Defined vs. Rmb Mendon Financial | Swan Defined vs. Fidelity Advisor Financial | Swan Defined vs. Mesirow Financial Small | Swan Defined vs. Gabelli Global Financial |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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