Correlation Between Strategic Asset and American Funds
Can any of the company-specific risk be diversified away by investing in both Strategic Asset 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 Strategic Asset and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Asset Management and American Funds Inflation, you can compare the effects of market volatilities on Strategic Asset 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 Strategic Asset with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Asset and American Funds.
Diversification Opportunities for Strategic Asset and American Funds
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Strategic and American is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Asset Management and American Funds Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inflation and Strategic Asset 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 Strategic Asset Management 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 Inflation has no effect on the direction of Strategic Asset i.e., Strategic Asset and American Funds go up and down completely randomly.
Pair Corralation between Strategic Asset and American Funds
Assuming the 90 days horizon Strategic Asset Management is expected to generate 1.14 times more return on investment than American Funds. However, Strategic Asset is 1.14 times more volatile than American Funds Inflation. It trades about 0.32 of its potential returns per unit of risk. American Funds Inflation is currently generating about 0.0 per unit of risk. If you would invest 1,203 in Strategic Asset Management on September 1, 2024 and sell it today you would earn a total of 24.00 from holding Strategic Asset Management or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Strategic Asset Management vs. American Funds Inflation
Performance |
| Timeline |
| Strategic Asset Mana |
| American Funds Inflation |
Strategic Asset and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Asset and American Funds
The main advantage of trading using opposite Strategic Asset and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Asset 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.| Strategic Asset vs. American Mutual Fund | Strategic Asset vs. Tax Managed Large Cap | Strategic Asset vs. Qs Large Cap | Strategic Asset vs. Large Cap Growth Profund |
| American Funds vs. Pace Large Growth | American Funds vs. Legg Mason Bw | American Funds vs. Tax Managed Large Cap | American Funds vs. Strategic Allocation Aggressive |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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