Correlation Between Commodities Strategy and American Funds

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

Diversification Opportunities for Commodities Strategy and American Funds

CommoditiesAmericanDiversified AwayCommoditiesAmericanDiversified Away100%
-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Commodities and American is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and American Funds Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Funda and Commodities Strategy 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 Commodities Strategy 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 Funda has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and American Funds go up and down completely randomly.

Pair Corralation between Commodities Strategy and American Funds

Assuming the 90 days horizon Commodities Strategy Fund is expected to generate 0.64 times more return on investment than American Funds. However, Commodities Strategy Fund is 1.57 times less risky than American Funds. It trades about 0.15 of its potential returns per unit of risk. American Funds Fundamental is currently generating about -0.03 per unit of risk. If you would invest  2,922  in Commodities Strategy Fund on October 21, 2024 and sell it today you would earn a total of  258.00  from holding Commodities Strategy Fund or generate 8.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Commodities Strategy Fund  vs.  American Funds Fundamental

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -8-6-4-2024
JavaScript chart by amCharts 3.21.15RYMBX ANCFX
       Timeline  
Commodities Strategy 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Commodities Strategy Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Commodities Strategy may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2929.53030.53131.532
American Funds Funda 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days American Funds Fundamental 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan8284868890

Commodities Strategy and American Funds Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.0-2.25-1.49-0.740.00.781.572.363.15 0.10.20.30.4
JavaScript chart by amCharts 3.21.15RYMBX ANCFX
       Returns  

Pair Trading with Commodities Strategy and American Funds

The main advantage of trading using opposite Commodities Strategy and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy 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 Commodities Strategy Fund and American Funds Fundamental 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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