Correlation Between Kopernik International and American Funds

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

By analyzing existing cross correlation between Kopernik International and American Funds Global, you can compare the effects of market volatilities on Kopernik International and American Funds 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 Kopernik International with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kopernik International and American Funds.

Diversification Opportunities for Kopernik International and American Funds

-0.31

Correlation Coefficient

Kopernik International  American Funds

Very good diversification

The 3 months correlation between Kopernik and American is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kopernik International and American Funds Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Global and Kopernik International 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 Kopernik International are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Global has no effect on the direction of Kopernik International i.e., Kopernik International and American Funds go up and down completely randomly.

Pair Corralation between Kopernik International and American Funds

Assuming the 90 days horizon Kopernik International is expected to under-perform the American Funds. In addition to that, Kopernik International is 1.06 times more volatile than American Funds Global. It trades about -0.07 of its total potential returns per unit of risk. American Funds Global is currently generating about 0.12 per unit of volatility. If you would invest  2,320  in American Funds Global on September 17, 2024 and sell it today you would earn a total of  115.00  from holding American Funds Global or generate 4.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kopernik International  vs.  American Funds Global

Kopernik International

Risk-Adjusted Performance

0 of 100

Very Weak

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

American Funds Global

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds Global are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Kopernik International and American Funds

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

The idea behind Kopernik International and American Funds Global 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.