Correlation Between American Funds and Simt Multi
Can any of the company-specific risk be diversified away by investing in both American Funds and Simt Multi 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 Simt Multi 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 Simt Multi Asset Inflation, you can compare the effects of market volatilities on American Funds and Simt Multi 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 Simt Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Simt Multi.
Diversification Opportunities for American Funds and Simt Multi
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Simt is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and Simt Multi Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Multi Asset 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 Simt Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Multi Asset has no effect on the direction of American Funds i.e., American Funds and Simt Multi go up and down completely randomly.
Pair Corralation between American Funds and Simt Multi
Assuming the 90 days horizon American Funds is expected to generate 1.17 times less return on investment than Simt Multi. In addition to that, American Funds is 1.46 times more volatile than Simt Multi Asset Inflation. It trades about 0.04 of its total potential returns per unit of risk. Simt Multi Asset Inflation is currently generating about 0.07 per unit of volatility. If you would invest 752.00 in Simt Multi Asset Inflation on September 12, 2024 and sell it today you would earn a total of 47.00 from holding Simt Multi Asset Inflation or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Inflation vs. Simt Multi Asset Inflation
Performance |
| Timeline |
| American Funds Inflation |
| Simt Multi Asset |
American Funds and Simt Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Simt Multi
The main advantage of trading using opposite American Funds and Simt Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Simt Multi 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 Simt Multi will offset losses from the drop in Simt Multi's long position.| American Funds vs. Vanguard Inflation Protected Securities | American Funds vs. Vanguard Inflation Protected Securities | American Funds vs. American Funds Inflation |
| Simt Multi vs. Capital Income Builder | Simt Multi vs. Capital Income Builder | Simt Multi vs. Capital Income Builder | Simt Multi vs. Capital Income Builder |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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