Correlation Between American Funds and Midcap Growth
Can any of the company-specific risk be diversified away by investing in both American Funds and Midcap 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 Midcap 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 Midcap Growth Fund, you can compare the effects of market volatilities on American Funds and Midcap 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 Midcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Midcap Growth.
Diversification Opportunities for American Funds and Midcap Growth
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Midcap is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Midcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap 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 Midcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Growth has no effect on the direction of American Funds i.e., American Funds and Midcap Growth go up and down completely randomly.
Pair Corralation between American Funds and Midcap Growth
Assuming the 90 days horizon American Funds is expected to generate 2.01 times less return on investment than Midcap Growth. But when comparing it to its historical volatility, American Funds Retirement is 2.76 times less risky than Midcap Growth. It trades about 0.14 of its potential returns per unit of risk. Midcap Growth Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 732.00 in Midcap Growth Fund on September 3, 2024 and sell it today you would earn a total of 96.00 from holding Midcap Growth Fund or generate 13.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 97.6% |
Values | Daily Returns |
American Funds Retirement vs. Midcap Growth Fund
Performance |
Timeline |
American Funds Retirement |
Midcap Growth |
American Funds and Midcap Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Funds and Midcap Growth
The main advantage of trading using opposite American Funds and Midcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Midcap 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 Midcap Growth will offset losses from the drop in Midcap Growth's long position.American Funds vs. Dreyfusstandish Global Fixed | American Funds vs. Ab Global Real | American Funds vs. Ab Global Real | American Funds vs. Qs Global Equity |
Midcap Growth vs. Dodge Cox Emerging | Midcap Growth vs. Ep Emerging Markets | Midcap Growth vs. Angel Oak Multi Strategy | Midcap Growth vs. T Rowe Price |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
CEOs Directory Screen CEOs from public companies around the world | |
Transaction History View history of all your transactions and understand their impact on performance | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |