Correlation Between American Funds and Cutler Equity
Can any of the company-specific risk be diversified away by investing in both American Funds and Cutler Equity 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 Cutler Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2060 and Cutler Equity, you can compare the effects of market volatilities on American Funds and Cutler Equity 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 Cutler Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Cutler Equity.
Diversification Opportunities for American Funds and Cutler Equity
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Cutler is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2060 and Cutler Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cutler Equity 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 2060 are associated (or correlated) with Cutler Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cutler Equity has no effect on the direction of American Funds i.e., American Funds and Cutler Equity go up and down completely randomly.
Pair Corralation between American Funds and Cutler Equity
Assuming the 90 days horizon American Funds is expected to generate 3.55 times less return on investment than Cutler Equity. But when comparing it to its historical volatility, American Funds 2060 is 1.08 times less risky than Cutler Equity. It trades about 0.09 of its potential returns per unit of risk. Cutler Equity is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,805 in Cutler Equity on August 31, 2024 and sell it today you would earn a total of 134.00 from holding Cutler Equity or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2060 vs. Cutler Equity
Performance |
| Timeline |
| American Funds 2060 |
| Cutler Equity |
American Funds and Cutler Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Cutler Equity
The main advantage of trading using opposite American Funds and Cutler Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Cutler Equity 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 Cutler Equity will offset losses from the drop in Cutler Equity's long position.| American Funds vs. Cutler Equity | American Funds vs. Multimedia Portfolio Multimedia | American Funds vs. Jpmorgan Equity Income | American Funds vs. Artisan Select Equity |
| Cutler Equity vs. Blrc Sgy Mnp | Cutler Equity vs. Ambrus Core Bond | Cutler Equity vs. Federated Ohio Municipal | Cutler Equity vs. Legg Mason Partners |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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