Correlation Between Amcap Fund and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Amcap Fund and Dow Jones 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 Amcap Fund and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amcap Fund Class and Dow Jones Industrial, you can compare the effects of market volatilities on Amcap Fund and Dow Jones 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 Amcap Fund with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcap Fund and Dow Jones.
Diversification Opportunities for Amcap Fund and Dow Jones
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AMCAP and Dow is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Amcap Fund 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 Amcap Fund Class are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Amcap Fund i.e., Amcap Fund and Dow Jones go up and down completely randomly.
Pair Corralation between Amcap Fund and Dow Jones
Assuming the 90 days horizon Amcap Fund is expected to generate 1.41 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Amcap Fund Class is 1.12 times less risky than Dow Jones. It trades about 0.29 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amcap Fund Class vs. Dow Jones Industrial
Performance |
| Timeline |
Amcap Fund and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Amcap Fund Class
Pair trading matchups for Amcap Fund
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Amcap Fund and Dow Jones
The main advantage of trading using opposite Amcap Fund and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Amcap Fund vs. The Gabelli Equity | Amcap Fund vs. Calamos Global Equity | Amcap Fund vs. Jpmorgan Equity Income | Amcap Fund vs. Small Cap Equity |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |