Correlation Between American Funds and Muzinich
Can any of the company-specific risk be diversified away by investing in both American Funds and Muzinich 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 Muzinich 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 Muzinich High Yield, you can compare the effects of market volatilities on American Funds and Muzinich 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 Muzinich. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Muzinich.
Diversification Opportunities for American Funds and Muzinich
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Muzinich is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Tax Advantaged and Muzinich High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muzinich High Yield 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 Muzinich. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muzinich High Yield has no effect on the direction of American Funds i.e., American Funds and Muzinich go up and down completely randomly.
Pair Corralation between American Funds and Muzinich
Assuming the 90 days horizon American Funds Tax Advantaged is expected to generate 1.7 times more return on investment than Muzinich. However, American Funds is 1.7 times more volatile than Muzinich High Yield. It trades about 0.32 of its potential returns per unit of risk. Muzinich High Yield is currently generating about 0.2 per unit of risk. If you would invest 1,628 in American Funds Tax Advantaged on September 1, 2024 and sell it today you would earn a total of 33.00 from holding American Funds Tax Advantaged or generate 2.03% 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. Muzinich High Yield
Performance |
| Timeline |
| American Funds Tax |
| Muzinich High Yield |
American Funds and Muzinich Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Muzinich
The main advantage of trading using opposite American Funds and Muzinich positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Muzinich 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 Muzinich will offset losses from the drop in Muzinich'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 |
| Muzinich vs. Muzinich Credit Opportunities | Muzinich vs. Muzinich Low Duration | Muzinich vs. Fidelity Advisor Balanced | Muzinich vs. Schwab Sp 500 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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