Correlation Between American Funds and Six Circles
Can any of the company-specific risk be diversified away by investing in both American Funds and Six Circles 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 American Funds and Six Circles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2055 and Six Circles Ultra, you can compare the effects of market volatilities on American Funds and Six Circles 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 American Funds with a short position of Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Six Circles.
Diversification Opportunities for American Funds and Six Circles
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Six is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2055 and Six Circles Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles Ultra and American 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 American Funds 2055 are associated (or correlated) with Six Circles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Circles Ultra has no effect on the direction of American Funds i.e., American Funds and Six Circles go up and down completely randomly.
Pair Corralation between American Funds and Six Circles
Assuming the 90 days horizon American Funds 2055 is expected to generate 4.84 times more return on investment than Six Circles. However, American Funds is 4.84 times more volatile than Six Circles Ultra. It trades about 0.14 of its potential returns per unit of risk. Six Circles Ultra is currently generating about 0.05 per unit of risk. If you would invest 2,698 in American Funds 2055 on September 13, 2024 and sell it today you would earn a total of 39.00 from holding American Funds 2055 or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2055 vs. Six Circles Ultra
Performance |
| Timeline |
| American Funds 2055 |
| Six Circles Ultra |
American Funds and Six Circles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Six Circles
The main advantage of trading using opposite American Funds and Six Circles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Six Circles 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 Six Circles will offset losses from the drop in Six Circles' long position.| American Funds vs. Aam Select Income | American Funds vs. Rbc Microcap Value | American Funds vs. Arrow Managed Futures | American Funds vs. Iaadx |
| Six Circles vs. Hennessy Technology Fund | Six Circles vs. Firsthand Technology Opportunities | Six Circles vs. Pgim Jennison Technology | Six Circles vs. Fidelity Advisor Technology |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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