Correlation Between Cref Money and American Funds
Can any of the company-specific risk be diversified away by investing in both Cref Money 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 Money 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 Money Market and American Funds 2050, you can compare the effects of market volatilities on Cref Money 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 Money with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Money and American Funds.
Diversification Opportunities for Cref Money and American Funds
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cref and American is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cref Money Market and American Funds 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2050 and Cref Money 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 Money Market 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 2050 has no effect on the direction of Cref Money i.e., Cref Money and American Funds go up and down completely randomly.
Pair Corralation between Cref Money and American Funds
Assuming the 90 days trading horizon Cref Money is expected to generate 8.11 times less return on investment than American Funds. But when comparing it to its historical volatility, Cref Money Market is 33.6 times less risky than American Funds. It trades about 1.02 of its potential returns per unit of risk. American Funds 2050 is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,149 in American Funds 2050 on September 2, 2024 and sell it today you would earn a total of 65.00 from holding American Funds 2050 or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cref Money Market vs. American Funds 2050
Performance |
| Timeline |
| Cref Money Market |
| American Funds 2050 |
Cref Money and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Money and American Funds
The main advantage of trading using opposite Cref Money and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Money 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 Money vs. Tfa Alphagen Growth | Cref Money vs. L Abbett Growth | Cref Money vs. Nationwide Growth Fund | Cref Money vs. Growth Opportunities Fund |
| American Funds vs. Transamerica Funds | American Funds vs. Franklin Government Money | American Funds vs. Ashmore Emerging Markets | American Funds vs. Cref Money Market |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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