Correlation Between Mirova Global and American Balanced

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

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

Diversification Opportunities for Mirova Global and American Balanced

0.53

Correlation Coefficient

Mirova Global  American Balanced

Very weak diversification

The 3 months correlation between Mirova and American is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mirova Global Green and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced and Mirova Global 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 Mirova Global Green 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 Mirova Global i.e., Mirova Global and American Balanced go up and down completely randomly.

Pair Corralation between Mirova Global and American Balanced

Assuming the 90 days horizon Mirova Global Green is expected to under-perform the American Balanced. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mirova Global Green is 2.31 times less risky than American Balanced. The mutual fund trades about -0.19 of its potential returns per unit of risk. The American Balanced Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,447  in American Balanced Fund on October 22, 2024 and sell it today you would earn a total of  43.00  from holding American Balanced Fund or generate 1.25% return on investment over 90 days.

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

Mirova Global Green  vs.  American Balanced Fund

Mirova Global Green

Risk-Adjusted Performance

0 of 100

Very Weak

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

American Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mirova Global and American Balanced

The main advantage of trading using opposite Mirova Global and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mirova Global 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.

The idea behind Mirova Global Green and American Balanced Fund 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.