Correlation Between Multi-index 2060 and American Funds
Can any of the company-specific risk be diversified away by investing in both Multi-index 2060 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 Multi-index 2060 and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Index 2060 Lifetime and American Funds 2060, you can compare the effects of market volatilities on Multi-index 2060 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 Multi-index 2060 with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi-index 2060 and American Funds.
Diversification Opportunities for Multi-index 2060 and American Funds
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multi-index and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Multi Index 2060 Lifetime and American Funds 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2060 and Multi-index 2060 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 Multi Index 2060 Lifetime 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 2060 has no effect on the direction of Multi-index 2060 i.e., Multi-index 2060 and American Funds go up and down completely randomly.
Pair Corralation between Multi-index 2060 and American Funds
Assuming the 90 days horizon Multi-index 2060 is expected to generate 1.05 times less return on investment than American Funds. In addition to that, Multi-index 2060 is 1.04 times more volatile than American Funds 2060. It trades about 0.08 of its total potential returns per unit of risk. American Funds 2060 is currently generating about 0.09 per unit of volatility. If you would invest 1,356 in American Funds 2060 on September 3, 2024 and sell it today you would earn a total of 515.00 from holding American Funds 2060 or generate 37.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Index 2060 Lifetime vs. American Funds 2060
Performance |
| Timeline |
| Multi Index 2060 |
| American Funds 2060 |
Multi-index 2060 and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi-index 2060 and American Funds
The main advantage of trading using opposite Multi-index 2060 and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi-index 2060 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.| Multi-index 2060 vs. American Funds 2060 | Multi-index 2060 vs. American Funds 2060 | Multi-index 2060 vs. American Funds 2060 | Multi-index 2060 vs. T Rowe Price |
| American Funds vs. American Funds 2055 | American Funds vs. American Funds 2050 | American Funds vs. American Funds 2045 | American Funds vs. American Funds 2040 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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