Correlation Between One Choice and American Fds

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Can any of the company-specific risk be diversified away by investing in both One Choice and American Fds 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 One Choice and American Fds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One Choice Blend and American Fds 2015, you can compare the effects of market volatilities on One Choice and American Fds 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 One Choice with a short position of American Fds. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Choice and American Fds.

Diversification Opportunities for One Choice and American Fds

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between AAAFX and American is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding One Choice Blend and American Fds 2015 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Fds 2015 and One Choice 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 One Choice Blend are associated (or correlated) with American Fds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Fds 2015 has no effect on the direction of One Choice i.e., One Choice and American Fds go up and down completely randomly.

Pair Corralation between One Choice and American Fds

Assuming the 90 days horizon One Choice Blend is expected to under-perform the American Fds. But the mutual fund apears to be less risky and, when comparing its historical volatility, One Choice Blend is 1.01 times less risky than American Fds. The mutual fund trades about -0.05 of its potential returns per unit of risk. The American Fds 2015 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,086  in American Fds 2015 on April 3, 2022 and sell it today you would earn a total of  61.00  from holding American Fds 2015 or generate 5.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy66.73%
ValuesDaily Returns

One Choice Blend  vs.  American Fds 2015

 Performance (%) 
      Timeline 
One Choice Blend 
AAAFX Performance
0 of 100
Over the last 90 days One Choice Blend has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

AAAFX Price Channel

American Fds 2015 
American Performance
0 of 100
Over the last 90 days American Fds 2015 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

American Price Channel

One Choice and American Fds Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with One Choice and American Fds

The main advantage of trading using opposite One Choice and American Fds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Choice position performs unexpectedly, American Fds 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 Fds will offset losses from the drop in American Fds' long position.

One Choice Blend

Pair trading matchups for One Choice

The idea behind One Choice Blend and American Fds 2015 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 Fds 2015

Pair trading matchups for American Fds

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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