Correlation Between American Funds and Cambiar Smid
Can any of the company-specific risk be diversified away by investing in both American Funds and Cambiar Smid 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 Cambiar Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Tax Advantaged and Cambiar Smid Fund, you can compare the effects of market volatilities on American Funds and Cambiar Smid 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 Cambiar Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Cambiar Smid.
Diversification Opportunities for American Funds and Cambiar Smid
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Cambiar is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Tax Advantaged and Cambiar Smid Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Smid 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 Tax Advantaged are associated (or correlated) with Cambiar Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Smid has no effect on the direction of American Funds i.e., American Funds and Cambiar Smid go up and down completely randomly.
Pair Corralation between American Funds and Cambiar Smid
Assuming the 90 days horizon American Funds is expected to generate 2.55 times less return on investment than Cambiar Smid. But when comparing it to its historical volatility, American Funds Tax Advantaged is 3.43 times less risky than Cambiar Smid. It trades about 0.32 of its potential returns per unit of risk. Cambiar Smid Fund is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,457 in Cambiar Smid Fund on September 1, 2024 and sell it today you would earn a total of 127.00 from holding Cambiar Smid Fund or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Tax Advantaged vs. Cambiar Smid Fund
Performance |
| Timeline |
| American Funds Tax |
| Cambiar Smid |
American Funds and Cambiar Smid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Cambiar Smid
The main advantage of trading using opposite American Funds and Cambiar Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Cambiar Smid 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 Cambiar Smid will offset losses from the drop in Cambiar Smid'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 |
| Cambiar Smid vs. Cambiar International Equity | Cambiar Smid vs. Cambiar Small Cap | Cambiar Smid vs. Cambiar Opportunity Fund | Cambiar Smid vs. Cambiar Small Cap |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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