Correlation Between American Funds and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both American Funds and Growth Strategy 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 Growth Strategy 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 Growth Strategy Fund, you can compare the effects of market volatilities on American Funds and Growth Strategy 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 Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Growth Strategy.
Diversification Opportunities for American Funds and Growth Strategy
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Growth is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy 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 Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of American Funds i.e., American Funds and Growth Strategy go up and down completely randomly.
Pair Corralation between American Funds and Growth Strategy
Assuming the 90 days horizon American Funds The is expected to under-perform the Growth Strategy. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds The is 1.48 times less risky than Growth Strategy. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Growth Strategy Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,156 in Growth Strategy Fund on October 7, 2025 and sell it today you would earn a total of 160.00 from holding Growth Strategy Fund or generate 13.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds The vs. Growth Strategy Fund
Performance |
| Timeline |
| American Funds |
| Growth Strategy |
American Funds and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Growth Strategy
The main advantage of trading using opposite American Funds and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Growth Strategy 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 Growth Strategy will offset losses from the drop in Growth Strategy's long position.| American Funds vs. Delaware Minnesota High Yield | American Funds vs. Fidelity American High | American Funds vs. John Hancock High | American Funds vs. Aggressive Balanced Allocation |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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