Correlation Between American Funds and American Balanced
Can any of the company-specific risk be diversified away by investing in both American Funds and American Balanced 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 American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Strategic and American Balanced Fund, you can compare the effects of market volatilities on American Funds and American Balanced 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 American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and American Balanced.
Diversification Opportunities for American Funds and American Balanced
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and American is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Strategic and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced 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 Strategic are associated (or correlated) with American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of American Funds i.e., American Funds and American Balanced go up and down completely randomly.
Pair Corralation between American Funds and American Balanced
Assuming the 90 days horizon American Funds Strategic is expected to generate 0.52 times more return on investment than American Balanced. However, American Funds Strategic is 1.92 times less risky than American Balanced. It trades about 0.17 of its potential returns per unit of risk. American Balanced Fund is currently generating about -0.02 per unit of risk. If you would invest 889.00 in American Funds Strategic on December 30, 2024 and sell it today you would earn a total of 30.00 from holding American Funds Strategic or generate 3.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
American Funds Strategic vs. American Balanced Fund
Performance |
Timeline |
American Funds Strategic |
American Balanced |
American Funds and American Balanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Funds and American Balanced
The main advantage of trading using opposite American Funds and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, American Balanced 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 Balanced will offset losses from the drop in American Balanced's long position.American Funds vs. American Funds Inflation | American Funds vs. Bond Fund Of | American Funds vs. Us Government Securities | American Funds vs. Baron Global Advantage |
American Balanced vs. T Rowe Price | American Balanced vs. Tiaa Cref Large Cap Value | American Balanced vs. Touchstone Large Cap | American Balanced vs. Vest Large Cap |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |