Correlation Between 1290 Smartbeta and American Funds
Can any of the company-specific risk be diversified away by investing in both 1290 Smartbeta and American Funds 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 1290 Smartbeta and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1290 Smartbeta Equity and American Funds Capital, you can compare the effects of market volatilities on 1290 Smartbeta and American Funds 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 1290 Smartbeta with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1290 Smartbeta and American Funds.
Diversification Opportunities for 1290 Smartbeta and American Funds
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 1290 and American is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding 1290 Smartbeta Equity and American Funds Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Capital and 1290 Smartbeta 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 1290 Smartbeta Equity are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Capital has no effect on the direction of 1290 Smartbeta i.e., 1290 Smartbeta and American Funds go up and down completely randomly.
Pair Corralation between 1290 Smartbeta and American Funds
Assuming the 90 days horizon 1290 Smartbeta Equity is expected to generate 0.86 times more return on investment than American Funds. However, 1290 Smartbeta Equity is 1.17 times less risky than American Funds. It trades about 0.11 of its potential returns per unit of risk. American Funds Capital is currently generating about 0.09 per unit of risk. If you would invest 1,544 in 1290 Smartbeta Equity on September 12, 2024 and sell it today you would earn a total of 452.00 from holding 1290 Smartbeta Equity or generate 29.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
1290 Smartbeta Equity vs. American Funds Capital
Performance |
| Timeline |
| 1290 Smartbeta Equity |
| American Funds Capital |
1290 Smartbeta and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1290 Smartbeta and American Funds
The main advantage of trading using opposite 1290 Smartbeta and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1290 Smartbeta position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| 1290 Smartbeta vs. SCOR PK | 1290 Smartbeta vs. Morningstar Unconstrained Allocation | 1290 Smartbeta vs. Thrivent High Yield | 1290 Smartbeta vs. Via Renewables |
| American Funds vs. American Funds Capital | American Funds vs. Capital World Growth | American Funds vs. Capital World Growth | American Funds vs. Capital World Growth |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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