Correlation Between International Growth and American Funds
Can any of the company-specific risk be diversified away by investing in both International Growth 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 International Growth and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Growth Fund and American Funds The, you can compare the effects of market volatilities on International Growth 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 International Growth with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Growth and American Funds.
Diversification Opportunities for International Growth and American Funds
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and American is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding International Growth Fund and American Funds The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds and International Growth 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 International Growth Fund 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 has no effect on the direction of International Growth i.e., International Growth and American Funds go up and down completely randomly.
Pair Corralation between International Growth and American Funds
Assuming the 90 days horizon International Growth Fund is expected to under-perform the American Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, International Growth Fund is 1.01 times less risky than American Funds. The mutual fund trades about -0.08 of its potential returns per unit of risk. The American Funds The is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,953 in American Funds The on September 13, 2024 and sell it today you would earn a total of 388.00 from holding American Funds The or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Growth Fund vs. American Funds The
Performance |
| Timeline |
| International Growth |
| American Funds |
International Growth and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Growth and American Funds
The main advantage of trading using opposite International Growth and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Growth 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.| International Growth vs. Value Fund Investor | International Growth vs. Ultra Fund Investor | International Growth vs. Growth Fund Investor | International Growth vs. Income Growth Fund |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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