Correlation Between American Funds and Acadian Emerging
Can any of the company-specific risk be diversified away by investing in both American Funds and Acadian Emerging 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 Acadian Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Acadian Emerging Markets, you can compare the effects of market volatilities on American Funds and Acadian Emerging 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 Acadian Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Acadian Emerging.
Diversification Opportunities for American Funds and Acadian Emerging
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Acadian is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Acadian Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadian Emerging Markets 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 New are associated (or correlated) with Acadian Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadian Emerging Markets has no effect on the direction of American Funds i.e., American Funds and Acadian Emerging go up and down completely randomly.
Pair Corralation between American Funds and Acadian Emerging
Assuming the 90 days horizon American Funds New is expected to under-perform the Acadian Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds New is 1.06 times less risky than Acadian Emerging. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Acadian Emerging Markets is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 2,397 in Acadian Emerging Markets on August 30, 2024 and sell it today you would lose (57.00) from holding Acadian Emerging Markets or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Funds New vs. Acadian Emerging Markets
Performance |
| Timeline |
| American Funds New |
| Acadian Emerging Markets |
American Funds and Acadian Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Acadian Emerging
The main advantage of trading using opposite American Funds and Acadian Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Acadian Emerging 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 Acadian Emerging will offset losses from the drop in Acadian Emerging's long position.| American Funds vs. Small Pany Growth | American Funds vs. T Rowe Price | American Funds vs. Qs Small Capitalization | American Funds vs. Ab Small Cap |
| Acadian Emerging vs. Acadian Emerging Markets | Acadian Emerging vs. Acadian Emerging Markets | Acadian Emerging vs. Money Market Obligations | Acadian Emerging vs. Mm Sp 500 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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