Correlation Between American Funds and Opportunity Fund
Can any of the company-specific risk be diversified away by investing in both American Funds and Opportunity Fund 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 Opportunity Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Income and Opportunity Fund Class, you can compare the effects of market volatilities on American Funds and Opportunity Fund 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 Opportunity Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Opportunity Fund.
Diversification Opportunities for American Funds and Opportunity Fund
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Opportunity is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Income and Opportunity Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opportunity Fund Class 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 Income are associated (or correlated) with Opportunity Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opportunity Fund Class has no effect on the direction of American Funds i.e., American Funds and Opportunity Fund go up and down completely randomly.
Pair Corralation between American Funds and Opportunity Fund
Assuming the 90 days horizon American Funds Income is expected to under-perform the Opportunity Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds Income is 3.44 times less risky than Opportunity Fund. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Opportunity Fund Class is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 898.00 in Opportunity Fund Class on September 13, 2024 and sell it today you would earn a total of 35.00 from holding Opportunity Fund Class or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
American Funds Income vs. Opportunity Fund Class
Performance |
| Timeline |
| American Funds Income |
| Opportunity Fund Class |
American Funds and Opportunity Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Opportunity Fund
The main advantage of trading using opposite American Funds and Opportunity Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Opportunity Fund 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 Opportunity Fund will offset losses from the drop in Opportunity Fund's long position.| American Funds vs. Blackrock Sm Cap | American Funds vs. Oaktree Diversifiedome | American Funds vs. Huber Capital Diversified | American Funds vs. Pioneer Diversified High |
| Opportunity Fund vs. Hsbc Opportunity Fund | Opportunity Fund vs. American Funds Income | Opportunity Fund vs. 1290 High Yield | Opportunity Fund vs. Money Market Obligations |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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