Correlation Between Science Technology and American Funds
Can any of the company-specific risk be diversified away by investing in both Science Technology 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 Science Technology and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Technology Fund and American Funds Washington, you can compare the effects of market volatilities on Science Technology 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 Science Technology with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Technology and American Funds.
Diversification Opportunities for Science Technology and American Funds
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Science and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Science Technology Fund and American Funds Washington in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Washington and Science Technology 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 Science Technology 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 Washington has no effect on the direction of Science Technology i.e., Science Technology and American Funds go up and down completely randomly.
Pair Corralation between Science Technology and American Funds
Assuming the 90 days horizon Science Technology Fund is expected to generate 2.69 times more return on investment than American Funds. However, Science Technology is 2.69 times more volatile than American Funds Washington. It trades about 0.07 of its potential returns per unit of risk. American Funds Washington is currently generating about -0.06 per unit of risk. If you would invest 2,892 in Science Technology Fund on September 12, 2024 and sell it today you would earn a total of 47.00 from holding Science Technology Fund or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Technology Fund vs. American Funds Washington
Performance |
| Timeline |
| Science Technology |
| American Funds Washington |
Science Technology and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Technology and American Funds
The main advantage of trading using opposite Science Technology and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Technology 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.| Science Technology vs. Simt Multi Asset Inflation | Science Technology vs. Guidepath Managed Futures | Science Technology vs. Arrow Managed Futures | Science Technology vs. Federated Hermes Inflation |
| American Funds vs. Schwab Small Cap Index | American Funds vs. Schwab Total Stock | American Funds vs. Schwab International Index | American Funds 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 CEOs Directory module to screen CEOs from public companies around the world.
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