Correlation Between American Balanced and Aju IB
Can any of the company-specific risk be diversified away by investing in both American Balanced and Aju IB 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 Aju IB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Aju IB Investment, you can compare the effects of market volatilities on American Balanced and Aju IB 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 Aju IB. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Aju IB.
Diversification Opportunities for American Balanced and Aju IB
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Aju is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Aju IB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aju IB Investment 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 Aju IB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aju IB Investment has no effect on the direction of American Balanced i.e., American Balanced and Aju IB go up and down completely randomly.
Pair Corralation between American Balanced and Aju IB
Assuming the 90 days horizon American Balanced is expected to generate 1.3 times less return on investment than Aju IB. But when comparing it to its historical volatility, American Balanced is 6.65 times less risky than Aju IB. It trades about 0.07 of its potential returns per unit of risk. Aju IB Investment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 250,890 in Aju IB Investment on November 3, 2024 and sell it today you would lose (14,890) from holding Aju IB Investment or give up 5.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.55% |
| Values | Daily Returns |
American Balanced vs. Aju IB Investment
Performance |
| Timeline |
| American Balanced |
| Aju IB Investment |
American Balanced and Aju IB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Aju IB
The main advantage of trading using opposite American Balanced and Aju IB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Aju IB 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 Aju IB will offset losses from the drop in Aju IB'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 |
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.
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