Correlation Between American Funds and First Trustconfluence

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

By analyzing existing cross correlation between American Funds 2045 and First Trustconfluence Small, you can compare the effects of market volatilities on American Funds and First Trustconfluence 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 First Trustconfluence. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and First Trustconfluence.

Diversification Opportunities for American Funds and First Trustconfluence

0.0

Correlation Coefficient

American Funds  First Trustconfluence

Pay attention - limited upside

The 3 months correlation between American and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2045 and First Trustconfluence Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trustconfluence 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 2045 are associated (or correlated) with First Trustconfluence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trustconfluence has no effect on the direction of American Funds i.e., American Funds and First Trustconfluence go up and down completely randomly.

Pair Corralation between American Funds and First Trustconfluence

If you would invest (100.00) in American Funds 2045 on August 26, 2025 and sell it today you would earn a total of  100.00  from holding American Funds 2045 or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Funds 2045  vs.  First Trustconfluence Small

American Funds 2045

Risk-Adjusted Performance

Soft

Over the last 90 days American Funds 2045 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Trustconfluence

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trustconfluence Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, First Trustconfluence 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 First Trustconfluence

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

The idea behind American Funds 2045 and First Trustconfluence Small 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.