Correlation Between American Balanced and IShares SP
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By analyzing existing cross correlation between American Balanced and iShares SP 500, you can compare the effects of market volatilities on American Balanced and IShares SP 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 IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and IShares SP.
Diversification Opportunities for American Balanced and IShares SP
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and IShares is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of American Balanced i.e., American Balanced and IShares SP go up and down completely randomly.
Pair Corralation between American Balanced and IShares SP
Assuming the 90 days horizon American Balanced is expected to generate 1.43 times less return on investment than IShares SP. But when comparing it to its historical volatility, American Balanced is 2.28 times less risky than IShares SP. It trades about 0.22 of its potential returns per unit of risk. iShares SP 500 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 11,535 in iShares SP 500 on November 3, 2024 and sell it today you would earn a total of 480.00 from holding iShares SP 500 or generate 4.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
American Balanced vs. iShares SP 500
Performance |
| Timeline |
| American Balanced |
| iShares SP 500 |
American Balanced and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and IShares SP
The main advantage of trading using opposite American Balanced and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, IShares SP 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 IShares SP will offset losses from the drop in IShares SP'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 |
| IShares SP vs. The Select Sector | IShares SP vs. Promotora y Operadora | IShares SP vs. iShares Global Timber | IShares SP vs. SPDR Series Trust |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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