Correlation Between Cref Inflation-linked and American Funds
Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked 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 Cref Inflation-linked and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and American Funds Inflation, you can compare the effects of market volatilities on Cref Inflation-linked 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 Cref Inflation-linked with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and American Funds.
Diversification Opportunities for Cref Inflation-linked and American Funds
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Cref and American is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond 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 Cref Inflation-linked 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 Cref Inflation Linked Bond 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 Cref Inflation-linked i.e., Cref Inflation-linked and American Funds go up and down completely randomly.
Pair Corralation between Cref Inflation-linked and American Funds
Assuming the 90 days trading horizon Cref Inflation Linked Bond is expected to generate 0.74 times more return on investment than American Funds. However, Cref Inflation Linked Bond is 1.36 times less risky than American Funds. It trades about 0.23 of its potential returns per unit of risk. American Funds Inflation is currently generating about 0.15 per unit of risk. If you would invest 8,484 in Cref Inflation Linked Bond on September 2, 2024 and sell it today you would earn a total of 71.00 from holding Cref Inflation Linked Bond or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. American Funds Inflation
Performance |
| Timeline |
| Cref Inflation Linked |
| American Funds Inflation |
Cref Inflation-linked and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation-linked and American Funds
The main advantage of trading using opposite Cref Inflation-linked and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation-linked 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.| Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard 500 Index | Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard Total Stock |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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