Correlation Between American Funds and Essex Environmental
Can any of the company-specific risk be diversified away by investing in both American Funds and Essex Environmental 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 Essex Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Essex Environmental Opportunities, you can compare the effects of market volatilities on American Funds and Essex Environmental 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 Essex Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Essex Environmental.
Diversification Opportunities for American Funds and Essex Environmental
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Essex is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Essex Environmental Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essex Environmental 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 Fundamental are associated (or correlated) with Essex Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essex Environmental has no effect on the direction of American Funds i.e., American Funds and Essex Environmental go up and down completely randomly.
Pair Corralation between American Funds and Essex Environmental
Assuming the 90 days horizon American Funds is expected to generate 1.06 times less return on investment than Essex Environmental. But when comparing it to its historical volatility, American Funds Fundamental is 1.44 times less risky than Essex Environmental. It trades about 0.1 of its potential returns per unit of risk. Essex Environmental Opportunities is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,422 in Essex Environmental Opportunities on August 27, 2024 and sell it today you would earn a total of 24.00 from holding Essex Environmental Opportunities or generate 1.69% 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 Fundamental vs. Essex Environmental Opportunit
Performance |
| Timeline |
| American Funds Funda |
| Essex Environmental |
American Funds and Essex Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Essex Environmental
The main advantage of trading using opposite American Funds and Essex Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Essex Environmental 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 Essex Environmental will offset losses from the drop in Essex Environmental'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 |
| Essex Environmental vs. Pear Tree Essex | Essex Environmental vs. Pear Tree Quality | Essex Environmental vs. Pear Tree Polaris | Essex Environmental vs. Pear Tree Polaris |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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