Correlation Between American Balanced and Cho Bi
Can any of the company-specific risk be diversified away by investing in both American Balanced and Cho Bi 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 Cho Bi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Cho Bi Co, you can compare the effects of market volatilities on American Balanced and Cho Bi 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 Cho Bi. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Cho Bi.
Diversification Opportunities for American Balanced and Cho Bi
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Cho is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Cho Bi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cho Bi 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 are associated (or correlated) with Cho Bi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cho Bi has no effect on the direction of American Balanced i.e., American Balanced and Cho Bi go up and down completely randomly.
Pair Corralation between American Balanced and Cho Bi
Assuming the 90 days horizon American Balanced is expected to generate 0.38 times more return on investment than Cho Bi. However, American Balanced is 2.65 times less risky than Cho Bi. It trades about 0.07 of its potential returns per unit of risk. Cho Bi Co is currently generating about -0.04 per unit of risk. If you would invest 3,198 in American Balanced on November 3, 2024 and sell it today you would earn a total of 335.00 from holding American Balanced or generate 10.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.95% |
| Values | Daily Returns |
American Balanced vs. Cho Bi Co
Performance |
| Timeline |
| American Balanced |
| Cho Bi |
American Balanced and Cho Bi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Cho Bi
The main advantage of trading using opposite American Balanced and Cho Bi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Cho Bi 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 Cho Bi will offset losses from the drop in Cho Bi'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 |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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