Correlation Between American Funds and Pax Global
Can any of the company-specific risk be diversified away by investing in both American Funds and Pax Global 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 Pax Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Capital and Pax Global Environmental, you can compare the effects of market volatilities on American Funds and Pax Global 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 Pax Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Pax Global.
Diversification Opportunities for American Funds and Pax Global
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Pax is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Capital and Pax Global Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Global Environmental 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 Capital are associated (or correlated) with Pax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Global Environmental has no effect on the direction of American Funds i.e., American Funds and Pax Global go up and down completely randomly.
Pair Corralation between American Funds and Pax Global
Assuming the 90 days horizon American Funds Capital is expected to generate 0.78 times more return on investment than Pax Global. However, American Funds Capital is 1.28 times less risky than Pax Global. It trades about -0.07 of its potential returns per unit of risk. Pax Global Environmental is currently generating about -0.1 per unit of risk. If you would invest 6,841 in American Funds Capital on August 25, 2024 and sell it today you would lose (74.00) from holding American Funds Capital or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Capital vs. Pax Global Environmental
Performance |
| Timeline |
| American Funds Capital |
| Pax Global Environmental |
American Funds and Pax Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Pax Global
The main advantage of trading using opposite American Funds and Pax Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Pax Global 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 Pax Global will offset losses from the drop in Pax Global's long position.| American Funds vs. Qs Growth Fund | American Funds vs. Blackrock Sm Cap | American Funds vs. Omni Small Cap Value | American Funds vs. Ab E Opportunities |
| Pax Global vs. T Rowe Price | Pax Global vs. Msif Emerging Markets | Pax Global vs. Delaware Small Cap | Pax Global vs. Fidelity Otc Portfolio |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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