Correlation Between American Balanced and HBM Healthcare
Can any of the company-specific risk be diversified away by investing in both American Balanced and HBM Healthcare 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 HBM Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and HBM Healthcare Investments, you can compare the effects of market volatilities on American Balanced and HBM Healthcare 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 HBM Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and HBM Healthcare.
Diversification Opportunities for American Balanced and HBM Healthcare
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and HBM is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and HBM Healthcare Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HBM Healthcare Inves 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 HBM Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HBM Healthcare Inves has no effect on the direction of American Balanced i.e., American Balanced and HBM Healthcare go up and down completely randomly.
Pair Corralation between American Balanced and HBM Healthcare
Assuming the 90 days horizon American Balanced is expected to generate 5.4 times less return on investment than HBM Healthcare. But when comparing it to its historical volatility, American Balanced is 2.74 times less risky than HBM Healthcare. It trades about 0.21 of its potential returns per unit of risk. HBM Healthcare Investments is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 17,140 in HBM Healthcare Investments on November 3, 2024 and sell it today you would earn a total of 2,800 from holding HBM Healthcare Investments or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Balanced vs. HBM Healthcare Investments
Performance |
| Timeline |
| American Balanced |
| HBM Healthcare Inves |
American Balanced and HBM Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and HBM Healthcare
The main advantage of trading using opposite American Balanced and HBM Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, HBM Healthcare 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 HBM Healthcare will offset losses from the drop in HBM Healthcare'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 |
| HBM Healthcare vs. BB Biotech AG | HBM Healthcare vs. Partners Group Holding | HBM Healthcare vs. Tecan Group AG | HBM Healthcare vs. VAT Group AG |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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