Correlation Between American Funds and Strategic Asset
Can any of the company-specific risk be diversified away by investing in both American Funds and Strategic Asset 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 Strategic Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Growth and Strategic Asset Management, you can compare the effects of market volatilities on American Funds and Strategic Asset 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 Strategic Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Strategic Asset.
Diversification Opportunities for American Funds and Strategic Asset
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Strategic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Growth and Strategic Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Asset Mana 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 Growth are associated (or correlated) with Strategic Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Asset Mana has no effect on the direction of American Funds i.e., American Funds and Strategic Asset go up and down completely randomly.
Pair Corralation between American Funds and Strategic Asset
Assuming the 90 days horizon American Funds Growth is expected to generate 1.11 times more return on investment than Strategic Asset. However, American Funds is 1.11 times more volatile than Strategic Asset Management. It trades about 0.29 of its potential returns per unit of risk. Strategic Asset Management is currently generating about 0.31 per unit of risk. If you would invest 2,627 in American Funds Growth on September 4, 2024 and sell it today you would earn a total of 119.00 from holding American Funds Growth or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.0% |
| Values | Daily Returns |
American Funds Growth vs. Strategic Asset Management
Performance |
| Timeline |
| American Funds Growth |
| Strategic Asset Mana |
American Funds and Strategic Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Strategic Asset
The main advantage of trading using opposite American Funds and Strategic Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Strategic Asset 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 Strategic Asset will offset losses from the drop in Strategic Asset's long position.| American Funds vs. Pioneer High Yield | American Funds vs. Western Asset High | American Funds vs. Ab High Income | American Funds vs. Guggenheim High Yield |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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