Correlation Between Versatile Bond and American Funds
Can any of the company-specific risk be diversified away by investing in both Versatile Bond 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 Versatile Bond and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versatile Bond Portfolio and American Funds 2065, you can compare the effects of market volatilities on Versatile Bond 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 Versatile Bond with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versatile Bond and American Funds.
Diversification Opportunities for Versatile Bond and American Funds
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VERSATILE and American is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and American Funds 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2065 and Versatile Bond 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 Versatile Bond 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 2065 has no effect on the direction of Versatile Bond i.e., Versatile Bond and American Funds go up and down completely randomly.
Pair Corralation between Versatile Bond and American Funds
Assuming the 90 days horizon Versatile Bond is expected to generate 14.34 times less return on investment than American Funds. But when comparing it to its historical volatility, Versatile Bond Portfolio is 4.94 times less risky than American Funds. It trades about 0.09 of its potential returns per unit of risk. American Funds 2065 is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,739 in American Funds 2065 on September 3, 2024 and sell it today you would earn a total of 53.00 from holding American Funds 2065 or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. American Funds 2065
Performance |
| Timeline |
| Versatile Bond Portfolio |
| American Funds 2065 |
Versatile Bond and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versatile Bond and American Funds
The main advantage of trading using opposite Versatile Bond and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond 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.| Versatile Bond vs. Short Term Treasury Portfolio | Versatile Bond vs. Aggressive Growth Portfolio | Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Thompson Bond Fund |
| American Funds vs. Aam Select Income | American Funds vs. Fa 529 Aggressive | American Funds vs. Fabxx | American Funds vs. Iaadx |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |