Correlation Between American Balanced and Shinhan WTI
Can any of the company-specific risk be diversified away by investing in both American Balanced and Shinhan WTI 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 Shinhan WTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Shinhan WTI Futures, you can compare the effects of market volatilities on American Balanced and Shinhan WTI 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 Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Shinhan WTI.
Diversification Opportunities for American Balanced and Shinhan WTI
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Shinhan is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Shinhan WTI Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan WTI Futures 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 Shinhan WTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan WTI Futures has no effect on the direction of American Balanced i.e., American Balanced and Shinhan WTI go up and down completely randomly.
Pair Corralation between American Balanced and Shinhan WTI
Assuming the 90 days horizon American Balanced is expected to generate 1.04 times less return on investment than Shinhan WTI. But when comparing it to its historical volatility, American Balanced is 2.78 times less risky than Shinhan WTI. It trades about 0.17 of its potential returns per unit of risk. Shinhan WTI Futures is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 770,000 in Shinhan WTI Futures on November 4, 2024 and sell it today you would earn a total of 13,500 from holding Shinhan WTI Futures or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
American Balanced vs. Shinhan WTI Futures
Performance |
| Timeline |
| American Balanced |
| Shinhan WTI Futures |
American Balanced and Shinhan WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Shinhan WTI
The main advantage of trading using opposite American Balanced and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Shinhan WTI 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 Shinhan WTI will offset losses from the drop in Shinhan WTI'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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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