Correlation Between American Fds and One Choice

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

Diversification Opportunities for American Fds and One Choice

0.97
  Correlation Coefficient

Almost no diversification

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

Pair Corralation between American Fds and One Choice

Assuming the 90 days horizon American Fds 2015 is expected to under-perform the One Choice. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Fds 2015 is 1.09 times less risky than One Choice. The mutual fund trades about -0.28 of its potential returns per unit of risk. The One Choice Blend is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest  943.00  in One Choice Blend on April 1, 2022 and sell it today you would lose (41.00)  from holding One Choice Blend or give up 4.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

American Fds 2015  vs.  One Choice Blend

 Performance (%) 
      Timeline 
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 uncertain 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 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 uncertain 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 and One Choice Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with American Fds and One Choice

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

American Fds 2015

Pair trading matchups for American Fds

The idea behind American Fds 2015 and One Choice Blend 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.

One Choice Blend

Pair trading matchups for One Choice

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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