Correlation Between American Funds and Growth Fund
Can any of the company-specific risk be diversified away by investing in both American Funds and Growth Fund 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 Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Europacific and Growth Fund Of, you can compare the effects of market volatilities on American Funds and Growth Fund 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 Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Growth Fund.
Diversification Opportunities for American Funds and Growth Fund
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Growth is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Europacific and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund 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 Europacific are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of American Funds i.e., American Funds and Growth Fund go up and down completely randomly.
Pair Corralation between American Funds and Growth Fund
Assuming the 90 days horizon American Funds is expected to generate 10.82 times less return on investment than Growth Fund. But when comparing it to its historical volatility, American Funds Europacific is 1.2 times less risky than Growth Fund. It trades about 0.04 of its potential returns per unit of risk. Growth Fund Of is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 6,944 in Growth Fund Of on September 1, 2024 and sell it today you would earn a total of 462.00 from holding Growth Fund Of or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Europacific vs. Growth Fund Of
Performance |
| Timeline |
| American Funds Europ |
| Growth Fund |
American Funds and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Growth Fund
The main advantage of trading using opposite American Funds and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| American Funds vs. Vanguard Institutional Index | American Funds vs. Vanguard Mid Cap Index | American Funds vs. Washington Mutual Investors | American Funds vs. Vanguard Small Cap Index |
| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Washington Mutual Investors | Growth Fund vs. Capital World Growth | Growth Fund vs. American Balanced Fund |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |