Correlation Between Amcap Fund and Intermediate Bond
Can any of the company-specific risk be diversified away by investing in both Amcap Fund 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 Amcap Fund and Intermediate Bond 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 Intermediate Bond Fund, you can compare the effects of market volatilities on Amcap Fund 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 Amcap Fund with a short position of Intermediate Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcap Fund and Intermediate Bond.
Diversification Opportunities for Amcap Fund and Intermediate Bond
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amcap and Intermediate is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class and Intermediate Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Bond 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 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 Amcap Fund i.e., Amcap Fund and Intermediate Bond go up and down completely randomly.
Pair Corralation between Amcap Fund and Intermediate Bond
Assuming the 90 days horizon Amcap Fund Class is expected to generate 3.29 times more return on investment than Intermediate Bond. However, Amcap Fund is 3.29 times more volatile than Intermediate Bond Fund. It trades about 0.21 of its potential returns per unit of risk. Intermediate Bond Fund is currently generating about 0.15 per unit of risk. If you would invest 4,119 in Amcap Fund Class on June 1, 2025 and sell it today you would earn a total of 395.00 from holding Amcap Fund Class or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amcap Fund Class vs. Intermediate Bond Fund
Performance |
| Timeline |
| Amcap Fund Class |
| Intermediate Bond |
Amcap Fund and Intermediate Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amcap Fund and Intermediate Bond
The main advantage of trading using opposite Amcap Fund and Intermediate Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund 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.| Amcap Fund vs. Europacific Growth Fund | Amcap Fund vs. Capital World Growth | Amcap Fund vs. American Funds Fundamental | Amcap Fund vs. Washington Mutual Investors |
| Intermediate Bond vs. Income Fund Of | Intermediate Bond vs. New World Fund | Intermediate Bond vs. American Mutual Fund | Intermediate Bond 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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