Correlation Between American Funds and Gqg Partners

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

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

Diversification Opportunities for American Funds and Gqg Partners

0.52

Correlation Coefficient

American Funds  Gqg Partners

Very weak diversification

The 3 months correlation between American and Gqg is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Gqg Partners Emerg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gqg Partners Emerg 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 New are associated (or correlated) with Gqg Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gqg Partners Emerg has no effect on the direction of American Funds i.e., American Funds and Gqg Partners go up and down completely randomly.

Pair Corralation between American Funds and Gqg Partners

Assuming the 90 days horizon American Funds New is expected to under-perform the Gqg Partners. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds New is 1.9 times less risky than Gqg Partners. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Gqg Partners Emerg is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,745  in Gqg Partners Emerg on October 11, 2024 and sell it today you would lose (95.00) from holding Gqg Partners Emerg or give up 5.44% of portfolio value over 90 days.

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

American Funds New  vs.  Gqg Partners Emerg

American Funds New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Funds New has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak 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.

Gqg Partners Emerg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gqg Partners Emerg has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak 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.

Pair Trading with American Funds and Gqg Partners

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

The idea behind American Funds New and Gqg Partners Emerg 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.