Correlation Between American Funds and Investment Managers
Can any of the company-specific risk be diversified away by investing in both American Funds and Investment Managers 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 Investment Managers 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 Investment Managers Series, you can compare the effects of market volatilities on American Funds and Investment Managers 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 Investment Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Investment Managers.
Diversification Opportunities for American Funds and Investment Managers
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Investment is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and Investment Managers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Managers 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 Investment Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Managers has no effect on the direction of American Funds i.e., American Funds and Investment Managers go up and down completely randomly.
Pair Corralation between American Funds and Investment Managers
Assuming the 90 days horizon American Funds Inflation is expected to generate 0.29 times more return on investment than Investment Managers. However, American Funds Inflation is 3.46 times less risky than Investment Managers. It trades about 0.31 of its potential returns per unit of risk. Investment Managers Series is currently generating about -0.22 per unit of risk. If you would invest 923.00 in American Funds Inflation on December 3, 2024 and sell it today you would earn a total of 17.00 from holding American Funds Inflation or generate 1.84% 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. Investment Managers Series
Performance |
| Timeline |
| American Funds Inflation |
| Investment Managers |
American Funds and Investment Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Investment Managers
The main advantage of trading using opposite American Funds and Investment Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Investment Managers 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 Investment Managers will offset losses from the drop in Investment Managers' long position.| American Funds vs. Ab Bond Inflation | American Funds vs. Multisector Bond Sma | American Funds vs. Dreyfusstandish Global Fixed | American Funds vs. Ms Global Fixed |
| Investment Managers vs. Global Gold Fund | Investment Managers vs. Invesco Gold Special | Investment Managers vs. The Gold Bullion | Investment Managers vs. World Precious Minerals |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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