Correlation Between Bbh Partner and American Funds

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

By analyzing existing cross correlation between Bbh Partner Fund and American Funds 2045, you can compare the effects of market volatilities on Bbh Partner 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 Bbh Partner with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bbh Partner and American Funds.

Diversification Opportunities for Bbh Partner and American Funds

0.32

Correlation Coefficient

Bbh Partner  American Funds

Weak diversification

The 3 months correlation between Bbh and American is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bbh Partner Fund and American Funds 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2045 and Bbh Partner 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 Bbh Partner Fund 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 2045 has no effect on the direction of Bbh Partner i.e., Bbh Partner and American Funds go up and down completely randomly.

Pair Corralation between Bbh Partner and American Funds

Assuming the 90 days horizon Bbh Partner Fund is expected to generate 1.18 times more return on investment than American Funds. However, Bbh Partner is 1.18 times more volatile than American Funds 2045. It trades about 0.13 of its potential returns per unit of risk. American Funds 2045 is currently generating about -0.03 per unit of risk. If you would invest  1,658  in Bbh Partner Fund on December 29, 2024 and sell it today you would earn a total of  123.00  from holding Bbh Partner Fund or generate 7.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bbh Partner Fund  vs.  American Funds 2045

Bbh Partner Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bbh Partner Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Bbh Partner may actually be approaching a critical reversion point that can send shares even higher in April 2025.

American Funds 2045

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Funds 2045 has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Bbh Partner and American Funds

The main advantage of trading using opposite Bbh Partner and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bbh Partner 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 Bbh Partner Fund and American Funds 2045 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.