Correlation Between Us Global and American Funds
Can any of the company-specific risk be diversified away by investing in both Us Global 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 Us Global and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Global Investors and American Funds 2065, you can compare the effects of market volatilities on Us Global 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 Us Global with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Global and American Funds.
Diversification Opportunities for Us Global and American Funds
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USLUX and American is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Us Global Investors and American Funds 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2065 and Us Global 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 Us Global Investors 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 2065 has no effect on the direction of Us Global i.e., Us Global and American Funds go up and down completely randomly.
Pair Corralation between Us Global and American Funds
Assuming the 90 days horizon Us Global Investors is expected to under-perform the American Funds. In addition to that, Us Global is 1.26 times more volatile than American Funds 2065. It trades about 0.0 of its total potential returns per unit of risk. American Funds 2065 is currently generating about 0.07 per unit of volatility. If you would invest 1,784 in American Funds 2065 on August 30, 2024 and sell it today you would earn a total of 17.00 from holding American Funds 2065 or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Global Investors vs. American Funds 2065
Performance |
| Timeline |
| Us Global Investors |
| American Funds 2065 |
Us Global and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Global and American Funds
The main advantage of trading using opposite Us Global and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Global 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.| Us Global vs. Virtus High Yield | Us Global vs. Pia High Yield | Us Global vs. Lord Abbett High | Us Global vs. Alpine High Yield |
| American Funds vs. Ab Global Risk | American Funds vs. Commonwealth Global Fund | American Funds vs. Artisan Global Unconstrained | American Funds vs. Us Global Investors |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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