Correlation Between Pacific Funds and American Funds
Can any of the company-specific risk be diversified away by investing in both Pacific Funds 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 Pacific Funds and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Funds Portfolio and American Funds Growth, you can compare the effects of market volatilities on Pacific Funds 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 Pacific Funds with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Funds and American Funds.
Diversification Opportunities for Pacific Funds and American Funds
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pacific and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Funds Portfolio and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth and Pacific Funds 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 Pacific Funds Portfolio 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 Growth has no effect on the direction of Pacific Funds i.e., Pacific Funds and American Funds go up and down completely randomly.
Pair Corralation between Pacific Funds and American Funds
Assuming the 90 days horizon Pacific Funds Portfolio is expected to generate 0.86 times more return on investment than American Funds. However, Pacific Funds Portfolio is 1.16 times less risky than American Funds. It trades about 0.38 of its potential returns per unit of risk. American Funds Growth is currently generating about 0.29 per unit of risk. If you would invest 1,399 in Pacific Funds Portfolio on September 4, 2024 and sell it today you would earn a total of 72.00 from holding Pacific Funds Portfolio or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Funds Portfolio vs. American Funds Growth
Performance |
| Timeline |
| Pacific Funds Portfolio |
| American Funds Growth |
Pacific Funds and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Funds and American Funds
The main advantage of trading using opposite Pacific Funds and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Funds 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.| Pacific Funds vs. T Rowe Price | Pacific Funds vs. The National Tax Free | Pacific Funds vs. Ambrus Core Bond | Pacific Funds vs. Maryland Tax Free Bond |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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