American Funds Correlations

RNCCX Fund  USD 13.02  0.02  0.15%   
The correlation of American Funds is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as American Funds moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if American Funds Income moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.

Significant diversification

The correlation between American Funds Income and NYA is 0.06 (i.e., Significant diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Income and NYA in the same portfolio, assuming nothing else is changed.
Check out Your Equity Center to better understand how to build diversified portfolios, which includes a position in American Funds Income. Also, note that the market value of any mutual fund could be tightly coupled with the direction of predictive economic indicators such as signals in main economic indicators.
  
The ability to find closely correlated positions to American Funds could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace American Funds when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back American Funds - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling American Funds Income to buy it.

Moving together with American Mutual Fund

  0.98AMECX Income FundPairCorr
  0.96RNEBX New World FundPairCorr
  0.97AMFCX American MutualPairCorr
  0.97AMFFX American MutualPairCorr
  0.89FPPPX American Funds PresePairCorr
  0.99AMEFX Income FundPairCorr
  0.94RNGGX New Economy FundPairCorr
  0.93RNGFX New Economy FundPairCorr
  0.94RNGHX New Economy FundPairCorr
  0.94RNGBX New Economy FundPairCorr
  0.94RNGAX New Economy FundPairCorr
  0.94RNGEX New Economy FundPairCorr
  0.93AMHIX American High IncomePairCorr
  0.89TEBCX Tax Exempt BondPairCorr
  0.89TECCX Tax Exempt FundPairCorr
  0.93TEAFX Tax Exempt BondPairCorr
  0.98FPTPX American Funds ConsePairCorr
  0.92TECFX Tax Exempt FundPairCorr
  0.93TEFEX Tax Exempt FundPairCorr

Related Correlations Analysis

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Risk-Adjusted Indicators

There is a big difference between American Mutual Fund performing well and American Funds Mutual Fund doing well as a business compared to the competition. There are so many exceptions to the norm that investors cannot definitively determine what's good or bad unless they analyze American Funds' multiple risk-adjusted performance indicators across the competitive landscape. These indicators are quantitative in nature and help investors forecast volatility and risk-adjusted expected returns across various positions.

Be your own money manager

Our tools can tell you how much better you can do entering a position in American Funds without increasing your portfolio risk or giving up the expected return. As an individual investor, you need to find a reliable way to track all your investment portfolios. However, your requirements will often be based on how much of the process you decide to do yourself. In addition to allowing all investors analytical transparency into all their portfolios, our tools can evaluate risk-adjusted returns of your individual positions relative to your overall portfolio.

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Already Invested in American Funds Income?

The danger of trading American Funds Income is mainly related to its market volatility and Mutual Fund specific events. As an investor, you must understand the concept of risk-adjusted return before you start trading. The most common way to measure the risk of American Funds is by using the Sharpe ratio. The ratio expresses how much excess return you acquire for the extra volatility you endure for holding a more risker asset than American Funds. The Sharpe ratio is calculated by using standard deviation and excess return to determine reward per unit of risk. To understand how volatile American Funds Income is, you must compare it to a benchmark. Traditionally, the risk-free rate of return is the rate of return on the shortest-dated U.S. Treasury, such as a 3-year bond.
Check out Your Equity Center to better understand how to build diversified portfolios, which includes a position in American Funds Income. Also, note that the market value of any mutual fund could be tightly coupled with the direction of predictive economic indicators such as signals in main economic indicators.
Note that the American Funds Income information on this page should be used as a complementary analysis to other American Funds' statistical models used 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Please note, there is a significant difference between American Funds' value and its price as these two are different measures arrived at by different means. Investors typically determine if American Funds is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, American Funds' price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.