Correlation Between American Funds and Guidepath Growth

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Can any of the company-specific risk be diversified away by investing in both American Funds and Guidepath Growth 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 Guidepath Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Capital and Guidepath Growth Allocation, you can compare the effects of market volatilities on American Funds and Guidepath Growth 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 Guidepath Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Guidepath Growth.

Diversification Opportunities for American Funds and Guidepath Growth

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between American and Guidepath is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Capital and Guidepath Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Growth All 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 Capital are associated (or correlated) with Guidepath Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Growth All has no effect on the direction of American Funds i.e., American Funds and Guidepath Growth go up and down completely randomly.

Pair Corralation between American Funds and Guidepath Growth

Assuming the 90 days horizon American Funds Capital is expected to under-perform the Guidepath Growth. In addition to that, American Funds is 3.62 times more volatile than Guidepath Growth Allocation. It trades about -0.1 of its total potential returns per unit of risk. Guidepath Growth Allocation is currently generating about 0.26 per unit of volatility. If you would invest  1,863  in Guidepath Growth Allocation on September 20, 2024 and sell it today you would earn a total of  46.00  from holding Guidepath Growth Allocation or generate 2.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

American Funds Capital  vs.  Guidepath Growth Allocation

 Performance 
       Timeline  
American Funds Capital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days American Funds Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Guidepath Growth All 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Growth Allocation are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guidepath Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Funds and Guidepath Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Funds and Guidepath Growth

The main advantage of trading using opposite American Funds and Guidepath Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Guidepath Growth 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 Guidepath Growth will offset losses from the drop in Guidepath Growth's long position.
The idea behind American Funds Capital and Guidepath Growth Allocation 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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