Correlation Between American Funds and Timothy Large/mip-cap
Can any of the company-specific risk be diversified away by investing in both American Funds and Timothy Large/mip-cap 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 Timothy Large/mip-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Tax Exempt and Timothy Largemip Cap Growth, you can compare the effects of market volatilities on American Funds and Timothy Large/mip-cap 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 Timothy Large/mip-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Timothy Large/mip-cap.
Diversification Opportunities for American Funds and Timothy Large/mip-cap
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Timothy is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Tax Exempt and Timothy Largemip Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Large/mip-cap 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 Tax Exempt are associated (or correlated) with Timothy Large/mip-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Large/mip-cap has no effect on the direction of American Funds i.e., American Funds and Timothy Large/mip-cap go up and down completely randomly.
Pair Corralation between American Funds and Timothy Large/mip-cap
Assuming the 90 days horizon American Funds is expected to generate 2.79 times less return on investment than Timothy Large/mip-cap. But when comparing it to its historical volatility, American Funds Tax Exempt is 11.36 times less risky than Timothy Large/mip-cap. It trades about 0.48 of its potential returns per unit of risk. Timothy Largemip Cap Growth is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,372 in Timothy Largemip Cap Growth on June 5, 2025 and sell it today you would earn a total of 70.00 from holding Timothy Largemip Cap Growth or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
American Funds Tax Exempt vs. Timothy Largemip Cap Growth
Performance |
| Timeline |
| American Funds Tax |
| Timothy Large/mip-cap |
American Funds and Timothy Large/mip-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Timothy Large/mip-cap
The main advantage of trading using opposite American Funds and Timothy Large/mip-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Timothy Large/mip-cap 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 Timothy Large/mip-cap will offset losses from the drop in Timothy Large/mip-cap's long position.| American Funds vs. American Funds Growth | American Funds vs. American Funds Preservation | American Funds vs. American Funds Balanced | American Funds vs. American Funds Income |
| Timothy Large/mip-cap vs. The Gold Bullion | Timothy Large/mip-cap vs. Gabelli Gold Fund | Timothy Large/mip-cap vs. International Investors Gold | Timothy Large/mip-cap vs. Fidelity Advisor Gold |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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