Correlation Between American Funds and Us Treasury

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both American Funds and Us Treasury 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 Us Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Government and Us Treasury Intermediate, you can compare the effects of market volatilities on American Funds and Us Treasury 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 Us Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Us Treasury.

Diversification Opportunities for American Funds and Us Treasury

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between American and PRTIX is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Government and Us Treasury Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Treasury Intermediate 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 Government are associated (or correlated) with Us Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Treasury Intermediate has no effect on the direction of American Funds i.e., American Funds and Us Treasury go up and down completely randomly.

Pair Corralation between American Funds and Us Treasury

Assuming the 90 days horizon American Funds Government is expected to under-perform the Us Treasury. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds Government is 1.06 times less risky than Us Treasury. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Us Treasury Intermediate is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  516.00  in Us Treasury Intermediate on August 29, 2024 and sell it today you would lose (14.00) from holding Us Treasury Intermediate or give up 2.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy97.67%
ValuesDaily Returns

American Funds Government  vs.  Us Treasury Intermediate

 Performance 
       Timeline  
American Funds Government 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days American Funds Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Us Treasury Intermediate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Us Treasury Intermediate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Us Treasury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Funds and Us Treasury Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Funds and Us Treasury

The main advantage of trading using opposite American Funds and Us Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Us Treasury 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 Us Treasury will offset losses from the drop in Us Treasury's long position.
The idea behind American Funds Government and Us Treasury Intermediate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

Other Complementary Tools

Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
CEOs Directory
Screen CEOs from public companies around the world
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation