Correlation Between American Funds and Dimensional 2010
Can any of the company-specific risk be diversified away by investing in both American Funds and Dimensional 2010 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 Dimensional 2010 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 Dimensional 2010 Target, you can compare the effects of market volatilities on American Funds and Dimensional 2010 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 Dimensional 2010. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Dimensional 2010.
Diversification Opportunities for American Funds and Dimensional 2010
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Dimensional is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2060 and Dimensional 2010 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2010 Target 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 Dimensional 2010. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2010 Target has no effect on the direction of American Funds i.e., American Funds and Dimensional 2010 go up and down completely randomly.
Pair Corralation between American Funds and Dimensional 2010
Assuming the 90 days horizon American Funds 2060 is expected to generate 3.05 times more return on investment than Dimensional 2010. However, American Funds is 3.05 times more volatile than Dimensional 2010 Target. It trades about 0.01 of its potential returns per unit of risk. Dimensional 2010 Target is currently generating about -0.02 per unit of risk. If you would invest 1,853 in American Funds 2060 on August 24, 2024 and sell it today you would earn a total of 1.00 from holding American Funds 2060 or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2060 vs. Dimensional 2010 Target
Performance |
| Timeline |
| American Funds 2060 |
| Dimensional 2010 Target |
American Funds and Dimensional 2010 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Dimensional 2010
The main advantage of trading using opposite American Funds and Dimensional 2010 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Dimensional 2010 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 Dimensional 2010 will offset losses from the drop in Dimensional 2010's long position.| American Funds vs. ABIVAX Socit Anonyme | American Funds vs. SCOR PK | American Funds vs. HUMANA INC | American Funds vs. Aquagold International |
| Dimensional 2010 vs. ABIVAX Socit Anonyme | Dimensional 2010 vs. SCOR PK | Dimensional 2010 vs. HUMANA INC | Dimensional 2010 vs. Aquagold International |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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