Correlation Between American Balanced and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both American Balanced and Solstad Offshore 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 Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Solstad Offshore ASA, you can compare the effects of market volatilities on American Balanced and Solstad Offshore 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 Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Solstad Offshore.
Diversification Opportunities for American Balanced and Solstad Offshore
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Solstad is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of American Balanced i.e., American Balanced and Solstad Offshore go up and down completely randomly.
Pair Corralation between American Balanced and Solstad Offshore
Assuming the 90 days horizon American Balanced is expected to generate 0.32 times more return on investment than Solstad Offshore. However, American Balanced is 3.16 times less risky than Solstad Offshore. It trades about 0.21 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.04 per unit of risk. If you would invest 3,439 in American Balanced on November 3, 2024 and sell it today you would earn a total of 94.00 from holding American Balanced or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
American Balanced vs. Solstad Offshore ASA
Performance |
| Timeline |
| American Balanced |
| Solstad Offshore ASA |
American Balanced and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Solstad Offshore
The main advantage of trading using opposite American Balanced and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore'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 |
| Solstad Offshore vs. Zegona Communications Plc | Solstad Offshore vs. Universal Display Corp | Solstad Offshore vs. Summit Materials Cl | Solstad Offshore vs. Darden Restaurants |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |