Correlation Between American Funds and Siit Emerging
Can any of the company-specific risk be diversified away by investing in both American Funds and Siit 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 Siit 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 Siit Emerging Markets, you can compare the effects of market volatilities on American Funds and Siit 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 Siit Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Siit Emerging.
Diversification Opportunities for American Funds and Siit Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Siit is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Siit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit 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 Siit Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Emerging Markets has no effect on the direction of American Funds i.e., American Funds and Siit Emerging go up and down completely randomly.
Pair Corralation between American Funds and Siit Emerging
Assuming the 90 days horizon American Funds New is expected to under-perform the Siit Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds New is 1.08 times less risky than Siit Emerging. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Siit Emerging Markets is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 1,052 in Siit Emerging Markets on August 28, 2024 and sell it today you would lose (47.00) from holding Siit Emerging Markets or give up 4.47% 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. Siit Emerging Markets
Performance |
| Timeline |
| American Funds New |
| Siit Emerging Markets |
American Funds and Siit Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Siit Emerging
The main advantage of trading using opposite American Funds and Siit Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Siit 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 Siit Emerging will offset losses from the drop in Siit Emerging'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 |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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