Correlation Between American Balanced and Arctic Gold
Can any of the company-specific risk be diversified away by investing in both American Balanced and Arctic Gold 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 Arctic Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Arctic Gold Publ, you can compare the effects of market volatilities on American Balanced and Arctic Gold 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 Arctic Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Arctic Gold.
Diversification Opportunities for American Balanced and Arctic Gold
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Arctic is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Arctic Gold Publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Gold Publ 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 Arctic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Gold Publ has no effect on the direction of American Balanced i.e., American Balanced and Arctic Gold go up and down completely randomly.
Pair Corralation between American Balanced and Arctic Gold
Assuming the 90 days horizon American Balanced is expected to generate 3.17 times less return on investment than Arctic Gold. But when comparing it to its historical volatility, American Balanced is 10.75 times less risky than Arctic Gold. It trades about 0.07 of its potential returns per unit of risk. Arctic Gold Publ is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Arctic Gold Publ on November 3, 2024 and sell it today you would lose (5.00) from holding Arctic Gold Publ or give up 17.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
American Balanced vs. Arctic Gold Publ
Performance |
| Timeline |
| American Balanced |
| Arctic Gold Publ |
American Balanced and Arctic Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Arctic Gold
The main advantage of trading using opposite American Balanced and Arctic Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Arctic Gold 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 Arctic Gold will offset losses from the drop in Arctic Gold'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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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