Correlation Between American Funds and Berwyn Income
Can any of the company-specific risk be diversified away by investing in both American Funds and Berwyn Income 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 Berwyn Income 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 Berwyn Income Fund, you can compare the effects of market volatilities on American Funds and Berwyn Income 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 Berwyn Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Berwyn Income.
Diversification Opportunities for American Funds and Berwyn Income
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Berwyn is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and Berwyn Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berwyn 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 Berwyn Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berwyn Income has no effect on the direction of American Funds i.e., American Funds and Berwyn Income go up and down completely randomly.
Pair Corralation between American Funds and Berwyn Income
Assuming the 90 days horizon American Funds is expected to generate 16.05 times less return on investment than Berwyn Income. But when comparing it to its historical volatility, American Funds Inflation is 1.03 times less risky than Berwyn Income. It trades about 0.01 of its potential returns per unit of risk. Berwyn Income Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,316 in Berwyn Income Fund on September 3, 2024 and sell it today you would earn a total of 27.00 from holding Berwyn Income Fund or generate 2.05% 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. Berwyn Income Fund
Performance |
| Timeline |
| American Funds Inflation |
| Berwyn Income |
American Funds and Berwyn Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Berwyn Income
The main advantage of trading using opposite American Funds and Berwyn Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Berwyn Income 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 Berwyn Income will offset losses from the drop in Berwyn Income's long position.| American Funds vs. Versatile Bond Portfolio | American Funds vs. Bbh Intermediate Municipal | American Funds vs. Ultra Short Fixed Income | American Funds vs. California Bond Fund |
| Berwyn Income vs. American Funds Inflation | Berwyn Income vs. American Funds Inflation | Berwyn Income vs. American Funds Inflation | Berwyn Income vs. American Funds 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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