Correlation Between Stellar and American Funds
Can any of the company-specific risk be diversified away by investing in both Stellar 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 Stellar and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and American Funds International, you can compare the effects of market volatilities on Stellar 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 Stellar with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and American Funds.
Diversification Opportunities for Stellar and American Funds
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stellar and American is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and American Funds International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inter and Stellar 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 Stellar 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 Inter has no effect on the direction of Stellar i.e., Stellar and American Funds go up and down completely randomly.
Pair Corralation between Stellar and American Funds
Assuming the 90 days trading horizon Stellar is expected to generate 10.71 times more return on investment than American Funds. However, Stellar is 10.71 times more volatile than American Funds International. It trades about 0.04 of its potential returns per unit of risk. American Funds International is currently generating about -0.37 per unit of risk. If you would invest 44.00 in Stellar on October 9, 2024 and sell it today you would earn a total of 0.00 from holding Stellar or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Stellar vs. American Funds International
Performance |
| Timeline |
| Stellar |
| American Funds Inter |
Stellar and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and American Funds
The main advantage of trading using opposite Stellar and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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 Stellar and American Funds International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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