Correlation Between Amcap Fund and Us Government
Can any of the company-specific risk be diversified away by investing in both Amcap Fund and Us Government 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 Amcap Fund and Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amcap Fund Class and Us Government Securities, you can compare the effects of market volatilities on Amcap Fund and Us Government 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 Amcap Fund with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcap Fund and Us Government.
Diversification Opportunities for Amcap Fund and Us Government
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amcap and RGVAX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities and Amcap Fund 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 Amcap Fund Class are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Amcap Fund i.e., Amcap Fund and Us Government go up and down completely randomly.
Pair Corralation between Amcap Fund and Us Government
Assuming the 90 days horizon Amcap Fund Class is expected to generate 2.5 times more return on investment than Us Government. However, Amcap Fund is 2.5 times more volatile than Us Government Securities. It trades about 0.19 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.16 per unit of risk. If you would invest 3,352 in Amcap Fund Class on June 12, 2025 and sell it today you would earn a total of 284.00 from holding Amcap Fund Class or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amcap Fund Class vs. Us Government Securities
Performance |
| Timeline |
| Amcap Fund Class |
| Us Government Securities |
Amcap Fund and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amcap Fund and Us Government
The main advantage of trading using opposite Amcap Fund and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Amcap Fund vs. Davis Real Estate | Amcap Fund vs. Vy Clarion Real | Amcap Fund vs. Redwood Real Estate | Amcap Fund vs. Baron Real Estate |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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