Correlation Between American Balanced and Guidepath(r) Managed
Can any of the company-specific risk be diversified away by investing in both American Balanced and Guidepath(r) Managed 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 Balanced and Guidepath(r) Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced Fund and Guidepath Managed Futures, you can compare the effects of market volatilities on American Balanced and Guidepath(r) Managed 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 Balanced with a short position of Guidepath(r) Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Guidepath(r) Managed.
Diversification Opportunities for American Balanced and Guidepath(r) Managed
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Guidepath(r) is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Guidepath Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Managed Futures and American Balanced 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 Balanced Fund are associated (or correlated) with Guidepath(r) Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Managed Futures has no effect on the direction of American Balanced i.e., American Balanced and Guidepath(r) Managed go up and down completely randomly.
Pair Corralation between American Balanced and Guidepath(r) Managed
Assuming the 90 days horizon American Balanced Fund is expected to generate 0.78 times more return on investment than Guidepath(r) Managed. However, American Balanced Fund is 1.29 times less risky than Guidepath(r) Managed. It trades about -0.02 of its potential returns per unit of risk. Guidepath Managed Futures is currently generating about -0.11 per unit of risk. If you would invest 3,428 in American Balanced Fund on December 30, 2024 and sell it today you would lose (29.00) from holding American Balanced Fund or give up 0.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Balanced Fund vs. Guidepath Managed Futures
Performance |
Timeline |
American Balanced |
Guidepath Managed Futures |
American Balanced and Guidepath(r) Managed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Balanced and Guidepath(r) Managed
The main advantage of trading using opposite American Balanced and Guidepath(r) Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Guidepath(r) Managed 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 Guidepath(r) Managed will offset losses from the drop in Guidepath(r) Managed's long position.American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
Guidepath(r) Managed vs. American Funds Inflation | Guidepath(r) Managed vs. Ab Bond Inflation | Guidepath(r) Managed vs. Ab Bond Inflation | Guidepath(r) Managed vs. Ab Bond Inflation |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
Commodity Directory Find actively traded commodities issued by global exchanges | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Global Correlations Find global opportunities by holding instruments from different markets |