Correlation Between American Funds and Vy Jpmorgan

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

By analyzing existing cross correlation between American Funds Inflation and Vy Jpmorgan Emerging, you can compare the effects of market volatilities on American Funds and Vy Jpmorgan 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 Vy Jpmorgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Vy Jpmorgan.

Diversification Opportunities for American Funds and Vy Jpmorgan

0.66

Correlation Coefficient

American Funds  Vy Jpmorgan

Poor diversification

The 3 months correlation between American and IJPTX is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and Vy Jpmorgan Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy Jpmorgan Emerging 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 Inflation are associated (or correlated) with Vy Jpmorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy Jpmorgan Emerging has no effect on the direction of American Funds i.e., American Funds and Vy Jpmorgan go up and down completely randomly.

Pair Corralation between American Funds and Vy Jpmorgan

Assuming the 90 days horizon American Funds Inflation is expected to under-perform the Vy Jpmorgan. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds Inflation is 1.18 times less risky than Vy Jpmorgan. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Vy Jpmorgan Emerging is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,239  in Vy Jpmorgan Emerging on September 22, 2024 and sell it today you would lose (7.00) from holding Vy Jpmorgan Emerging or give up 0.56% of portfolio value over 90 days.

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

American Funds Inflation  vs.  Vy Jpmorgan Emerging

American Funds Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Funds Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vy Jpmorgan Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vy Jpmorgan Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vy Jpmorgan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Funds and Vy Jpmorgan

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

The idea behind American Funds Inflation and Vy Jpmorgan Emerging 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.