Correlation Between American Balanced and Pan International
Can any of the company-specific risk be diversified away by investing in both American Balanced and Pan International 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 Pan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Pan International Industrial Corp, you can compare the effects of market volatilities on American Balanced and Pan International 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 Pan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Pan International.
Diversification Opportunities for American Balanced and Pan International
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Pan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Pan International Industrial C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan International 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 Pan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan International has no effect on the direction of American Balanced i.e., American Balanced and Pan International go up and down completely randomly.
Pair Corralation between American Balanced and Pan International
Assuming the 90 days horizon American Balanced is expected to generate 2.99 times less return on investment than Pan International. But when comparing it to its historical volatility, American Balanced is 3.73 times less risky than Pan International. It trades about 0.07 of its potential returns per unit of risk. Pan International Industrial Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,215 in Pan International Industrial Corp on November 3, 2024 and sell it today you would earn a total of 860.00 from holding Pan International Industrial Corp or generate 26.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.36% |
| Values | Daily Returns |
American Balanced vs. Pan International Industrial C
Performance |
| Timeline |
| American Balanced |
| Pan International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
American Balanced and Pan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Pan International
The main advantage of trading using opposite American Balanced and Pan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Pan International 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 Pan International will offset losses from the drop in Pan International'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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |