Correlation Between American Funds and Great West
Can any of the company-specific risk be diversified away by investing in both American Funds and Great West 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 Great West 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 Great West Loomis Sayles, you can compare the effects of market volatilities on American Funds and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Great West.
Diversification Opportunities for American Funds and Great West
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Great is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Great West Loomis Sayles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Loomis 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Loomis has no effect on the direction of American Funds i.e., American Funds and Great West go up and down completely randomly.
Pair Corralation between American Funds and Great West
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.69 times more return on investment than Great West. However, American Funds Fundamental is 1.44 times less risky than Great West. It trades about 0.12 of its potential returns per unit of risk. Great West Loomis Sayles is currently generating about 0.05 per unit of risk. If you would invest 5,575 in American Funds Fundamental on September 14, 2024 and sell it today you would earn a total of 3,318 from holding American Funds Fundamental or generate 59.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Great West Loomis Sayles
Performance |
| Timeline |
| American Funds Funda |
| Great West Loomis |
American Funds and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Great West
The main advantage of trading using opposite American Funds and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| American Funds vs. Artisan Global Unconstrained | American Funds vs. Qs Global Equity | American Funds vs. Ab Global Risk | American Funds vs. Mirova Global Green |
| Great West vs. Vanguard Health Care | Great West vs. Baron Health Care | Great West vs. Invesco Global Health | Great West vs. Delaware Healthcare Fund |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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