Correlation Between Fixed Income and American Funds
Can any of the company-specific risk be diversified away by investing in both Fixed Income and American Funds 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 Fixed Income and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Fixed Income and American Funds Preservation, you can compare the effects of market volatilities on Fixed Income and American Funds 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 Fixed Income with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fixed Income and American Funds.
Diversification Opportunities for Fixed Income and American Funds
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fixed and American is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Fixed Income and American Funds Preservation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Prese and Fixed Income 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 The Fixed Income are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Prese has no effect on the direction of Fixed Income i.e., Fixed Income and American Funds go up and down completely randomly.
Pair Corralation between Fixed Income and American Funds
Assuming the 90 days horizon The Fixed Income is expected to generate 1.93 times more return on investment than American Funds. However, Fixed Income is 1.93 times more volatile than American Funds Preservation. It trades about 0.12 of its potential returns per unit of risk. American Funds Preservation is currently generating about 0.1 per unit of risk. If you would invest 643.00 in The Fixed Income on September 12, 2024 and sell it today you would earn a total of 102.00 from holding The Fixed Income or generate 15.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Fixed Income vs. American Funds Preservation
Performance |
| Timeline |
| Fixed Income |
| American Funds Prese |
Fixed Income and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fixed Income and American Funds
The main advantage of trading using opposite Fixed Income and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fixed Income position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Fixed Income vs. Goldman Sachs Government | Fixed Income vs. Davis Government Bond | Fixed Income vs. Inverse Government Long | Fixed Income vs. Schwab Government Money |
| American Funds vs. SCOR PK | American Funds vs. Morningstar Unconstrained Allocation | American Funds vs. Via Renewables | American Funds vs. Bondbloxx ETF Trust |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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