Correlation Between Metropolitan West and American Funds

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

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

Diversification Opportunities for Metropolitan West and American Funds

0.0

Correlation Coefficient

Metropolitan West  American Funds

Pay attention - limited upside

The 3 months correlation between Metropolitan and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Porate and American Funds International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inter and Metropolitan West 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 Metropolitan West Porate 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 Inter has no effect on the direction of Metropolitan West i.e., Metropolitan West and American Funds go up and down completely randomly.

Pair Corralation between Metropolitan West and American Funds

If you would invest  1,635  in American Funds International on December 24, 2024 and sell it today you would earn a total of  146.00  from holding American Funds International or generate 8.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Metropolitan West Porate  vs.  American Funds International

Metropolitan West Porate

Risk-Adjusted Performance

Very Weak

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

American Funds Inter

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds International are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, American Funds may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Metropolitan West and American Funds

The main advantage of trading using opposite Metropolitan West and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West 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 Metropolitan West Porate and American Funds International 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.