Correlation Between American Funds and Usaa Nasdaq

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

By analyzing existing cross correlation between American Funds The and Usaa Nasdaq 100, you can compare the effects of market volatilities on American Funds and Usaa Nasdaq 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 Usaa Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Usaa Nasdaq.

Diversification Opportunities for American Funds and Usaa Nasdaq

0.65

Correlation Coefficient

American Funds  Usaa Nasdaq

Poor diversification

The 3 months correlation between American and Usaa is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Usaa Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usaa Nasdaq 100 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 The are associated (or correlated) with Usaa Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usaa Nasdaq 100 has no effect on the direction of American Funds i.e., American Funds and Usaa Nasdaq go up and down completely randomly.

Pair Corralation between American Funds and Usaa Nasdaq

Assuming the 90 days horizon American Funds The is expected to under-perform the Usaa Nasdaq. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds The is 1.15 times less risky than Usaa Nasdaq. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Usaa Nasdaq 100 is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,555  in Usaa Nasdaq 100 on February 9, 2024 and sell it today you would lose (22.00) from holding Usaa Nasdaq 100 or give up 0.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

American Funds The  vs.  Usaa Nasdaq 100

American Funds

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds The are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Usaa Nasdaq 100

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Usaa Nasdaq 100 are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Usaa Nasdaq is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Funds and Usaa Nasdaq

The main advantage of trading using opposite American Funds and Usaa Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Usaa Nasdaq 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 Usaa Nasdaq will offset losses from the drop in Usaa Nasdaq's long position.

The idea behind American Funds The and Usaa Nasdaq 100 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.