Correlation Between International Investors and American Funds
Can any of the company-specific risk be diversified away by investing in both International Investors 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 International Investors and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Investors Gold and American Funds Washington, you can compare the effects of market volatilities on International Investors 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 International Investors with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and American Funds.
Diversification Opportunities for International Investors and American Funds
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and American is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and American Funds Washington in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Washington and International Investors 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 International Investors Gold 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 Washington has no effect on the direction of International Investors i.e., International Investors and American Funds go up and down completely randomly.
Pair Corralation between International Investors and American Funds
Assuming the 90 days horizon International Investors Gold is expected to under-perform the American Funds. In addition to that, International Investors is 2.63 times more volatile than American Funds Washington. It trades about -0.24 of its total potential returns per unit of risk. American Funds Washington is currently generating about 0.12 per unit of volatility. If you would invest 6,456 in American Funds Washington on August 30, 2024 and sell it today you would earn a total of 124.00 from holding American Funds Washington or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
International Investors Gold vs. American Funds Washington
Performance |
| Timeline |
| International Investors |
| American Funds Washington |
International Investors and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Investors and American Funds
The main advantage of trading using opposite International Investors and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors 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.| International Investors vs. Goldman Sachs Clean | International Investors vs. Gabelli Gold Fund | International Investors vs. Goldman Sachs Centrated | International Investors vs. Precious Metals And |
| American Funds vs. International Investors Gold | American Funds vs. Europac Gold Fund | American Funds vs. Global Gold Fund | American Funds vs. Gabelli Gold 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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