Correlation Between Heartland Value and American Funds
Can any of the company-specific risk be diversified away by investing in both Heartland Value 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 Heartland Value and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Value Plus and American Funds Fundamental, you can compare the effects of market volatilities on Heartland Value 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 Heartland Value with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and American Funds.
Diversification Opportunities for Heartland Value and American Funds
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Heartland and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and American Funds Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Funda and Heartland Value 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 Heartland Value Plus 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 Funda has no effect on the direction of Heartland Value i.e., Heartland Value and American Funds go up and down completely randomly.
Pair Corralation between Heartland Value and American Funds
Assuming the 90 days horizon Heartland Value Plus is expected to generate 1.39 times more return on investment than American Funds. However, Heartland Value is 1.39 times more volatile than American Funds Fundamental. It trades about 0.1 of its potential returns per unit of risk. American Funds Fundamental is currently generating about 0.11 per unit of risk. If you would invest 3,508 in Heartland Value Plus on September 2, 2024 and sell it today you would earn a total of 543.00 from holding Heartland Value Plus or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heartland Value Plus vs. American Funds Fundamental
Performance |
| Timeline |
| Heartland Value Plus |
| American Funds Funda |
Heartland Value and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Value and American Funds
The main advantage of trading using opposite Heartland Value and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value 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.| Heartland Value vs. Lkcm Small Mid Cap | Heartland Value vs. Precious Metals And | Heartland Value vs. American Beacon International | Heartland Value vs. Hotchkis Wiley Small |
| American Funds vs. Blackrock Sm Cap | American Funds vs. Davenport Small Cap | American Funds vs. Western Asset Diversified | American Funds vs. Fidelity Advisor Diversified |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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