Correlation Between American Funds and Shenkman Short
Can any of the company-specific risk be diversified away by investing in both American Funds and Shenkman Short 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 Shenkman Short 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 Shenkman Short Duration, you can compare the effects of market volatilities on American Funds and Shenkman Short 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 Shenkman Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Shenkman Short.
Diversification Opportunities for American Funds and Shenkman Short
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Shenkman is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2055 and Shenkman Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenkman Short Duration 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 Shenkman Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenkman Short Duration has no effect on the direction of American Funds i.e., American Funds and Shenkman Short go up and down completely randomly.
Pair Corralation between American Funds and Shenkman Short
Assuming the 90 days horizon American Funds 2055 is expected to generate 4.4 times more return on investment than Shenkman Short. However, American Funds is 4.4 times more volatile than Shenkman Short Duration. It trades about 0.28 of its potential returns per unit of risk. Shenkman Short Duration is currently generating about 0.07 per unit of risk. If you would invest 2,631 in American Funds 2055 on September 5, 2024 and sell it today you would earn a total of 93.00 from holding American Funds 2055 or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds 2055 vs. Shenkman Short Duration
Performance |
| Timeline |
| American Funds 2055 |
| Shenkman Short Duration |
American Funds and Shenkman Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Shenkman Short
The main advantage of trading using opposite American Funds and Shenkman Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Shenkman Short 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 Shenkman Short will offset losses from the drop in Shenkman Short's long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| Shenkman Short vs. American Funds 2055 | Shenkman Short vs. Vanguard Value Index | Shenkman Short vs. Wells Fargo Ultra | Shenkman Short vs. Multi Asset Growth Strategy |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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