Correlation Between American Funds and Guidemark Large
Can any of the company-specific risk be diversified away by investing in both American Funds and Guidemark Large 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 Guidemark Large 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 Guidemark Large Cap, you can compare the effects of market volatilities on American Funds and Guidemark Large 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 Guidemark Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Guidemark Large.
Diversification Opportunities for American Funds and Guidemark Large
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Guidemark is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Guidemark Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Large Cap 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 Guidemark Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Large Cap has no effect on the direction of American Funds i.e., American Funds and Guidemark Large go up and down completely randomly.
Pair Corralation between American Funds and Guidemark Large
Assuming the 90 days horizon American Funds New is expected to generate 0.75 times more return on investment than Guidemark Large. However, American Funds New is 1.33 times less risky than Guidemark Large. It trades about -0.23 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about -0.19 per unit of risk. If you would invest 8,351 in American Funds New on August 27, 2024 and sell it today you would lose (271.00) from holding American Funds New or give up 3.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds New vs. Guidemark Large Cap
Performance |
| Timeline |
| American Funds New |
| Guidemark Large Cap |
American Funds and Guidemark Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Guidemark Large
The main advantage of trading using opposite American Funds and Guidemark Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Guidemark Large 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 Guidemark Large will offset losses from the drop in Guidemark Large's long position.| American Funds vs. Income Fund Of | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund | American Funds vs. American Funds Income |
| Guidemark Large vs. Short Duration Inflation | Guidemark Large vs. Deutsche Global Inflation | Guidemark Large vs. Ab Bond Inflation | Guidemark Large vs. Aqr Managed Futures |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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