Correlation Between American Fds and Global Small
Can any of the company-specific risk be diversified away by investing in both American Fds and Global Small 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 Fds and Global Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Fds Smallcap and Global Small, you can compare the effects of market volatilities on American Fds and Global Small 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 Fds with a short position of Global Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Fds and Global Small.
Diversification Opportunities for American Fds and Global Small
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Fds Smallcap and Global Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Small and American Fds 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 Fds Smallcap are associated (or correlated) with Global Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Small has no effect on the direction of American Fds i.e., American Fds and Global Small go up and down completely randomly.
Pair Corralation between American Fds and Global Small
Assuming the 90 days horizon American Fds is expected to generate 1.73 times less return on investment than Global Small. But when comparing it to its historical volatility, American Fds Smallcap is 1.03 times less risky than Global Small. It trades about 0.04 of its potential returns per unit of risk. Global Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,385 in Global Small on September 12, 2024 and sell it today you would earn a total of 282.00 from holding Global Small or generate 20.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
American Fds Smallcap vs. Global Small
Performance |
| Timeline |
| American Fds Smallcap |
| Global Small |
American Fds and Global Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Fds and Global Small
The main advantage of trading using opposite American Fds and Global Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Fds position performs unexpectedly, Global Small 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 Global Small will offset losses from the drop in Global Small's long position.| American Fds vs. Allianzgi Diversified Income | American Fds vs. Delaware Limited Term Diversified | American Fds vs. Western Asset Diversified | American Fds vs. Wilmington Diversified Income |
| Global Small vs. Hennessy Bp Energy | Global Small vs. Goehring Rozencwajg Resources | Global Small vs. Icon Natural Resources | Global Small vs. Calvert Global Energy |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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