Correlation Between American Funds and Bbh Select
Can any of the company-specific risk be diversified away by investing in both American Funds and Bbh Select 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 Bbh Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Amcap and Bbh Select Series, you can compare the effects of market volatilities on American Funds and Bbh Select 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 Bbh Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Bbh Select.
Diversification Opportunities for American Funds and Bbh Select
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Bbh is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Amcap and Bbh Select Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bbh Select Series 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 Amcap are associated (or correlated) with Bbh Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bbh Select Series has no effect on the direction of American Funds i.e., American Funds and Bbh Select go up and down completely randomly.
Pair Corralation between American Funds and Bbh Select
Assuming the 90 days horizon American Funds is expected to generate 2.23 times less return on investment than Bbh Select. But when comparing it to its historical volatility, American Funds Amcap is 1.15 times less risky than Bbh Select. It trades about 0.11 of its potential returns per unit of risk. Bbh Select Series is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,231 in Bbh Select Series on August 30, 2024 and sell it today you would earn a total of 63.00 from holding Bbh Select Series or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Amcap vs. Bbh Select Series
Performance |
| Timeline |
| American Funds Amcap |
| Bbh Select Series |
American Funds and Bbh Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Bbh Select
The main advantage of trading using opposite American Funds and Bbh Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Bbh Select 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 Bbh Select will offset losses from the drop in Bbh Select's long position.| American Funds vs. Capital World Growth | American Funds vs. Smallcap World Fund | American Funds vs. Washington Mutual Investors | American Funds vs. Aquagold International |
| Bbh Select vs. Bbh Limited Duration | Bbh Select vs. Bbh Limited Duration | Bbh Select vs. Bbh Partner Fund | Bbh Select vs. Bbh Intermediate Municipal |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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