Correlation Between American Funds and Westcore Global
Can any of the company-specific risk be diversified away by investing in both American Funds and Westcore 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 Westcore 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 Westcore Global Large Cap, you can compare the effects of market volatilities on American Funds and Westcore 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 Westcore Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Westcore Global.
Diversification Opportunities for American Funds and Westcore Global
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Westcore is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Capital and Westcore Global Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westcore Global Large 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 Westcore Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westcore Global Large has no effect on the direction of American Funds i.e., American Funds and Westcore Global go up and down completely randomly.
Pair Corralation between American Funds and Westcore Global
Assuming the 90 days horizon American Funds is expected to generate 1.04 times less return on investment than Westcore Global. But when comparing it to its historical volatility, American Funds Capital is 1.06 times less risky than Westcore Global. It trades about 0.09 of its potential returns per unit of risk. Westcore Global Large Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 888.00 in Westcore Global Large Cap on September 4, 2024 and sell it today you would earn a total of 343.00 from holding Westcore Global Large Cap or generate 38.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Funds Capital vs. Westcore Global Large Cap
Performance |
| Timeline |
| American Funds Capital |
| Westcore Global Large |
American Funds and Westcore Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Westcore Global
The main advantage of trading using opposite American Funds and Westcore Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Westcore 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 Westcore Global will offset losses from the drop in Westcore Global's long position.| American Funds vs. Nationwide Growth Fund | American Funds vs. Pace Smallmedium Growth | American Funds vs. Smallcap Growth Fund | American Funds vs. Franklin Growth Opportunities |
| Westcore Global vs. John Hancock Money | Westcore Global vs. Lord Abbett Emerging | Westcore Global vs. Prudential Government Money | Westcore Global vs. Matson Money Equity |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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