Correlation Between American Balanced and BetaPro SPTSX
Can any of the company-specific risk be diversified away by investing in both American Balanced and BetaPro SPTSX 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 BetaPro SPTSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and BetaPro SPTSX Capped, you can compare the effects of market volatilities on American Balanced and BetaPro SPTSX 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 BetaPro SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and BetaPro SPTSX.
Diversification Opportunities for American Balanced and BetaPro SPTSX
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and BetaPro is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and BetaPro SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SPTSX Capped 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 BetaPro SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SPTSX Capped has no effect on the direction of American Balanced i.e., American Balanced and BetaPro SPTSX go up and down completely randomly.
Pair Corralation between American Balanced and BetaPro SPTSX
Assuming the 90 days horizon American Balanced is expected to generate 0.27 times more return on investment than BetaPro SPTSX. However, American Balanced is 3.67 times less risky than BetaPro SPTSX. It trades about 0.13 of its potential returns per unit of risk. BetaPro SPTSX Capped is currently generating about -0.37 per unit of risk. If you would invest 3,457 in American Balanced on October 23, 2024 and sell it today you would earn a total of 44.00 from holding American Balanced or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced vs. BetaPro SPTSX Capped
Performance |
| Timeline |
| American Balanced |
| BetaPro SPTSX Capped |
American Balanced and BetaPro SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and BetaPro SPTSX
The main advantage of trading using opposite American Balanced and BetaPro SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, BetaPro SPTSX 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 BetaPro SPTSX will offset losses from the drop in BetaPro SPTSX'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 |
| BetaPro SPTSX vs. BetaPro SP TSX | BetaPro SPTSX vs. BetaPro SP TSX | BetaPro SPTSX vs. BetaPro SPTSX Capped | BetaPro SPTSX vs. BetaPro SPTSX 60 |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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