Correlation Between American Balanced and Global Dominion
Can any of the company-specific risk be diversified away by investing in both American Balanced and Global Dominion 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 Global Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Global Dominion Access, you can compare the effects of market volatilities on American Balanced and Global Dominion 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 Global Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Global Dominion.
Diversification Opportunities for American Balanced and Global Dominion
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Global is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Global Dominion Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Dominion Access 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 Global Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Dominion Access has no effect on the direction of American Balanced i.e., American Balanced and Global Dominion go up and down completely randomly.
Pair Corralation between American Balanced and Global Dominion
Assuming the 90 days horizon American Balanced is expected to generate 7.89 times less return on investment than Global Dominion. But when comparing it to its historical volatility, American Balanced is 1.93 times less risky than Global Dominion. It trades about 0.13 of its potential returns per unit of risk. Global Dominion Access is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 274.00 in Global Dominion Access on October 23, 2024 and sell it today you would earn a total of 29.00 from holding Global Dominion Access or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced vs. Global Dominion Access
Performance |
| Timeline |
| American Balanced |
| Global Dominion Access |
American Balanced and Global Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Global Dominion
The main advantage of trading using opposite American Balanced and Global Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Global Dominion 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 Global Dominion will offset losses from the drop in Global Dominion'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 |
| Global Dominion vs. CIE Automotive SA | Global Dominion vs. Gestamp Automocion SA | Global Dominion vs. Vidrala SA | Global Dominion vs. Miquel y Costas |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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