Correlation Between American Funds and Mercer Us

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

By analyzing existing cross correlation between American Funds 2030 and Mercer Smallmid Cap, you can compare the effects of market volatilities on American Funds and Mercer Us 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 Mercer Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Mercer Us.

Diversification Opportunities for American Funds and Mercer Us

0.0

Correlation Coefficient

American Funds  Mercer Us

Pay attention - limited upside

The 3 months correlation between American and Mercer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2030 and Mercer Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercer Smallmid 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 2030 are associated (or correlated) with Mercer Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercer Smallmid Cap has no effect on the direction of American Funds i.e., American Funds and Mercer Us go up and down completely randomly.

Pair Corralation between American Funds and Mercer Us

If you would invest  1,131  in Mercer Smallmid Cap on June 9, 2024 and sell it today you would earn a total of  21.00  from holding Mercer Smallmid Cap or generate 1.86% return on investment over 90 days.

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

American Funds 2030  vs.  Mercer Smallmid Cap

American Funds 2030

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days American Funds 2030 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mercer Smallmid Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mercer Smallmid Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mercer Us 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 Mercer Us

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

The idea behind American Funds 2030 and Mercer Smallmid Cap 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.