Correlation Between American Funds and Multi-manager Growth
Can any of the company-specific risk be diversified away by investing in both American Funds and Multi-manager Growth 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 Multi-manager Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Multi Manager Growth Strategies, you can compare the effects of market volatilities on American Funds and Multi-manager Growth 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 Multi-manager Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Multi-manager Growth.
Diversification Opportunities for American Funds and Multi-manager Growth
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Multi-manager is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Multi Manager Growth Strategie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Growth 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 Retirement are associated (or correlated) with Multi-manager Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Growth has no effect on the direction of American Funds i.e., American Funds and Multi-manager Growth go up and down completely randomly.
Pair Corralation between American Funds and Multi-manager Growth
Assuming the 90 days horizon American Funds is expected to generate 2.23 times less return on investment than Multi-manager Growth. But when comparing it to its historical volatility, American Funds Retirement is 2.77 times less risky than Multi-manager Growth. It trades about 0.1 of its potential returns per unit of risk. Multi Manager Growth Strategies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,375 in Multi Manager Growth Strategies on November 27, 2024 and sell it today you would earn a total of 689.00 from holding Multi Manager Growth Strategies or generate 50.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Retirement vs. Multi Manager Growth Strategie
Performance |
| Timeline |
| American Funds Retirement |
| Multi Manager Growth |
American Funds and Multi-manager Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Multi-manager Growth
The main advantage of trading using opposite American Funds and Multi-manager Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Multi-manager Growth 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 Multi-manager Growth will offset losses from the drop in Multi-manager Growth's long position.| American Funds vs. Wisdomtree Siegel Global | American Funds vs. Alliancebernstein Global Highome | American Funds vs. T Rowe Price | American Funds vs. Doubleline Global Bond |
| Multi-manager Growth vs. Artisan Small Cap | Multi-manager Growth vs. Legg Mason Partners | Multi-manager Growth vs. Nuveen Small Cap | Multi-manager Growth vs. Transamerica International Small |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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