Correlation Between Intermediate Bond and American Funds
Can any of the company-specific risk be diversified away by investing in both Intermediate Bond 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 Intermediate Bond and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Bond Fund and American Funds 2025, you can compare the effects of market volatilities on Intermediate Bond 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 Intermediate Bond with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Bond and American Funds.
Diversification Opportunities for Intermediate Bond and American Funds
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Intermediate and American is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Bond Fund and American Funds 2025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2025 and Intermediate Bond 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 Intermediate Bond 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 2025 has no effect on the direction of Intermediate Bond i.e., Intermediate Bond and American Funds go up and down completely randomly.
Pair Corralation between Intermediate Bond and American Funds
Assuming the 90 days horizon Intermediate Bond is expected to generate 37.0 times less return on investment than American Funds. But when comparing it to its historical volatility, Intermediate Bond Fund is 1.76 times less risky than American Funds. It trades about 0.0 of its potential returns per unit of risk. American Funds 2025 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,373 in American Funds 2025 on January 18, 2024 and sell it today you would earn a total of 91.00 from holding American Funds 2025 or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Intermediate Bond Fund vs. American Funds 2025
Performance |
| Timeline |
| Intermediate Bond |
| American Funds 2025 |
Intermediate Bond and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Bond and American Funds
The main advantage of trading using opposite Intermediate Bond and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Bond 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.| Intermediate Bond vs. American Mutual Fund | Intermediate Bond vs. American Mutual Fund | Intermediate Bond vs. American Funds Income | Intermediate Bond vs. American Funds Preservation |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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