Correlation Between American Funds and Intermediate Bond
Can any of the company-specific risk be diversified away by investing in both American Funds and Intermediate Bond 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 Intermediate Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2025 and Intermediate Bond Fund, you can compare the effects of market volatilities on American Funds and Intermediate Bond 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 Intermediate Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Intermediate Bond.
Diversification Opportunities for American Funds and Intermediate Bond
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Intermediate is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2025 and Intermediate Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Bond 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 2025 are associated (or correlated) with Intermediate Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Bond has no effect on the direction of American Funds i.e., American Funds and Intermediate Bond go up and down completely randomly.
Pair Corralation between American Funds and Intermediate Bond
Assuming the 90 days horizon American Funds 2025 is expected to under-perform the Intermediate Bond. In addition to that, American Funds is 1.48 times more volatile than Intermediate Bond Fund. It trades about -0.19 of its total potential returns per unit of risk. Intermediate Bond Fund is currently generating about -0.22 per unit of volatility. If you would invest 1,236 in Intermediate Bond Fund on January 26, 2024 and sell it today you would lose (17.00) from holding Intermediate Bond Fund or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2025 vs. Intermediate Bond Fund
Performance |
| Timeline |
| American Funds 2025 |
| Intermediate Bond |
American Funds and Intermediate Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Intermediate Bond
The main advantage of trading using opposite American Funds and Intermediate Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Intermediate Bond 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 Intermediate Bond will offset losses from the drop in Intermediate Bond's long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| Intermediate Bond vs. Dunham Real Estate | Intermediate Bond vs. Deutsche Real Estate | Intermediate Bond vs. Short Real Estate | Intermediate Bond vs. Pender Real Estate |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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