Correlation Between Chia and American Funds
Can any of the company-specific risk be diversified away by investing in both Chia 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 Chia and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and American Funds 2040, you can compare the effects of market volatilities on Chia 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 Chia with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and American Funds.
Diversification Opportunities for Chia and American Funds
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chia and American is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Chia and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 and Chia 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 Chia 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 2040 has no effect on the direction of Chia i.e., Chia and American Funds go up and down completely randomly.
Pair Corralation between Chia and American Funds
Assuming the 90 days trading horizon Chia is expected to generate 9.57 times more return on investment than American Funds. However, Chia is 9.57 times more volatile than American Funds 2040. It trades about 0.09 of its potential returns per unit of risk. American Funds 2040 is currently generating about 0.01 per unit of risk. If you would invest 2,168 in Chia on October 20, 2024 and sell it today you would earn a total of 217.00 from holding Chia or generate 10.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Chia vs. American Funds 2040
Performance |
| Timeline |
| Chia |
| American Funds 2040 |
Chia and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and American Funds
The main advantage of trading using opposite Chia and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia 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.The idea behind Chia and American Funds 2040 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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