Correlation Between American Funds and Cambiar Smid
Can any of the company-specific risk be diversified away by investing in both American Funds and Cambiar Smid 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 Cambiar Smid 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 Cambiar Smid Fund, you can compare the effects of market volatilities on American Funds and Cambiar Smid 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 Cambiar Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Cambiar Smid.
Diversification Opportunities for American Funds and Cambiar Smid
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Cambiar is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Amcap and Cambiar Smid Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Smid 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 Cambiar Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Smid has no effect on the direction of American Funds i.e., American Funds and Cambiar Smid go up and down completely randomly.
Pair Corralation between American Funds and Cambiar Smid
Assuming the 90 days horizon American Funds Amcap is expected to generate 1.1 times more return on investment than Cambiar Smid. However, American Funds is 1.1 times more volatile than Cambiar Smid Fund. It trades about 0.1 of its potential returns per unit of risk. Cambiar Smid Fund is currently generating about 0.09 per unit of risk. If you would invest 4,161 in American Funds Amcap on September 1, 2024 and sell it today you would earn a total of 463.00 from holding American Funds Amcap or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Amcap vs. Cambiar Smid Fund
Performance |
| Timeline |
| American Funds Amcap |
| Cambiar Smid |
American Funds and Cambiar Smid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Cambiar Smid
The main advantage of trading using opposite American Funds and Cambiar Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Cambiar Smid 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 Cambiar Smid will offset losses from the drop in Cambiar Smid's long position.| American Funds vs. Europacific Growth Fund | American Funds vs. Washington Mutual Investors | American Funds vs. Capital World Growth | American Funds vs. American Balanced Fund |
| Cambiar Smid vs. Cambiar International Equity | Cambiar Smid vs. Cambiar Small Cap | Cambiar Smid vs. Cambiar Opportunity Fund | Cambiar Smid vs. Cambiar Small Cap |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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