Correlation Between American Funds and Bondbloxx ETF

Can any of the company-specific risk be diversified away by investing in both American Funds and Bondbloxx ETF 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 Funds and Bondbloxx ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Funds 2050 and Bondbloxx ETF Trust, you can compare the effects of market volatilities on American Funds and Bondbloxx ETF 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 Funds with a short position of Bondbloxx ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Bondbloxx ETF.

Diversification Opportunities for American Funds and Bondbloxx ETF

-0.23

Correlation Coefficient

American Funds  Bondbloxx ETF

Very good diversification

The 3 months correlation between American and Bondbloxx is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2050 and Bondbloxx ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bondbloxx ETF Trust and American Funds 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 Funds 2050 are associated (or correlated) with Bondbloxx ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bondbloxx ETF Trust has no effect on the direction of American Funds i.e., American Funds and Bondbloxx ETF go up and down completely randomly.

Pair Corralation between American Funds and Bondbloxx ETF

Assuming the 90 days horizon American Funds 2050 is expected to generate 4.39 times more return on investment than Bondbloxx ETF. However, American Funds is 4.39 times more volatile than Bondbloxx ETF Trust. It trades about 0.11 of its potential returns per unit of risk. Bondbloxx ETF Trust is currently generating about 0.1 per unit of risk. If you would invest  1,547  in American Funds 2050 on September 13, 2024 and sell it today you would earn a total of  664.00  from holding American Funds 2050 or generate 42.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

American Funds 2050  vs.  Bondbloxx ETF Trust

American Funds 2050

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds 2050 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bondbloxx ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bondbloxx ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bondbloxx ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with American Funds and Bondbloxx ETF

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

The idea behind American Funds 2050 and Bondbloxx ETF Trust 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.