Correlation Between Qs Growth and American Funds
Can any of the company-specific risk be diversified away by investing in both Qs Growth 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 Qs Growth and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qs Growth Fund and American Funds Balanced, you can compare the effects of market volatilities on Qs Growth 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 Qs Growth with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Growth and American Funds.
Diversification Opportunities for Qs Growth and American Funds
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LANIX and American is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Qs Growth Fund and American Funds Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Balanced and Qs Growth 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 Qs Growth Fund 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 Balanced has no effect on the direction of Qs Growth i.e., Qs Growth and American Funds go up and down completely randomly.
Pair Corralation between Qs Growth and American Funds
Assuming the 90 days horizon Qs Growth is expected to generate 1.36 times less return on investment than American Funds. In addition to that, Qs Growth is 1.2 times more volatile than American Funds Balanced. It trades about 0.02 of its total potential returns per unit of risk. American Funds Balanced is currently generating about 0.04 per unit of volatility. If you would invest 1,891 in American Funds Balanced on September 12, 2024 and sell it today you would earn a total of 6.00 from holding American Funds Balanced or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Qs Growth Fund vs. American Funds Balanced
Performance |
| Timeline |
| Qs Growth Fund |
| American Funds Balanced |
Qs Growth and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qs Growth and American Funds
The main advantage of trading using opposite Qs Growth and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Growth 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.| Qs Growth vs. Msift High Yield | Qs Growth vs. City National Rochdale | Qs Growth vs. Gmo High Yield | Qs Growth vs. Voya High Yield |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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