Correlation Between Precious Metals and American Funds
Can any of the company-specific risk be diversified away by investing in both Precious Metals 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 Precious Metals and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precious Metals And and American Funds 2015, you can compare the effects of market volatilities on Precious Metals 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 Precious Metals with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and American Funds.
Diversification Opportunities for Precious Metals and American Funds
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Precious and American is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and American Funds 2015 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2015 and Precious Metals 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 Precious Metals And 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 2015 has no effect on the direction of Precious Metals i.e., Precious Metals and American Funds go up and down completely randomly.
Pair Corralation between Precious Metals and American Funds
Assuming the 90 days horizon Precious Metals And is expected to under-perform the American Funds. In addition to that, Precious Metals is 6.8 times more volatile than American Funds 2015. It trades about -0.06 of its total potential returns per unit of risk. American Funds 2015 is currently generating about -0.01 per unit of volatility. If you would invest 1,321 in American Funds 2015 on September 13, 2024 and sell it today you would lose (2.00) from holding American Funds 2015 or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precious Metals And vs. American Funds 2015
Performance |
| Timeline |
| Precious Metals And |
| American Funds 2015 |
Precious Metals and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and American Funds
The main advantage of trading using opposite Precious Metals and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals 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.| Precious Metals vs. Capital Growth Fund | Precious Metals vs. Emerging Markets Fund | Precious Metals vs. High Income Fund | Precious Metals vs. Growth Income Fund |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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