Correlation Between Leader Short-term and American Growth
Can any of the company-specific risk be diversified away by investing in both Leader Short-term and American Growth 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 Leader Short-term and American Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Short Term Bond and American Growth Fund, you can compare the effects of market volatilities on Leader Short-term and American Growth 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 Leader Short-term with a short position of American Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Short-term and American Growth.
Diversification Opportunities for Leader Short-term and American Growth
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leader and American is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Leader Short Term Bond and American Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Growth and Leader Short-term 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 Leader Short Term Bond are associated (or correlated) with American Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Growth has no effect on the direction of Leader Short-term i.e., Leader Short-term and American Growth go up and down completely randomly.
Pair Corralation between Leader Short-term and American Growth
Assuming the 90 days horizon Leader Short Term Bond is expected to generate 0.28 times more return on investment than American Growth. However, Leader Short Term Bond is 3.51 times less risky than American Growth. It trades about 0.17 of its potential returns per unit of risk. American Growth Fund is currently generating about 0.03 per unit of risk. If you would invest 646.00 in Leader Short Term Bond on November 2, 2024 and sell it today you would earn a total of 182.00 from holding Leader Short Term Bond or generate 28.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Leader Short Term Bond vs. American Growth Fund
Performance |
| Timeline |
| Leader Short Term |
| American Growth |
Leader Short-term and American Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Short-term and American Growth
The main advantage of trading using opposite Leader Short-term and American Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Short-term position performs unexpectedly, American Growth 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 Growth will offset losses from the drop in American Growth's long position.| Leader Short-term vs. Lord Abbett Convertible | Leader Short-term vs. Calamos Dynamic Convertible | Leader Short-term vs. Putnam Convertible Securities | Leader Short-term vs. Fidelity Sai Convertible |
| American Growth vs. Real Estate Ultrasector | American Growth vs. Nexpoint Real Estate | American Growth vs. Columbia Real Estate | American Growth vs. Prudential Real Estate |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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