Correlation Between American Balanced and Ladenburg Growth
Can any of the company-specific risk be diversified away by investing in both American Balanced and Ladenburg Growth 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 Ladenburg Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Ladenburg Growth Income, you can compare the effects of market volatilities on American Balanced and Ladenburg Growth 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 Ladenburg Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Ladenburg Growth.
Diversification Opportunities for American Balanced and Ladenburg Growth
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Ladenburg is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Ladenburg Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Growth Income 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 Ladenburg Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Growth Income has no effect on the direction of American Balanced i.e., American Balanced and Ladenburg Growth go up and down completely randomly.
Pair Corralation between American Balanced and Ladenburg Growth
Assuming the 90 days horizon American Balanced is expected to generate 0.29 times more return on investment than Ladenburg Growth. However, American Balanced is 3.42 times less risky than Ladenburg Growth. It trades about 0.24 of its potential returns per unit of risk. Ladenburg Growth Income is currently generating about -0.15 per unit of risk. If you would invest 3,410 in American Balanced on October 20, 2024 and sell it today you would earn a total of 91.00 from holding American Balanced or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
American Balanced vs. Ladenburg Growth Income
Performance |
| Timeline |
| American Balanced |
| Ladenburg Growth Income |
American Balanced and Ladenburg Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Ladenburg Growth
The main advantage of trading using opposite American Balanced and Ladenburg Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Ladenburg Growth 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 Ladenburg Growth will offset losses from the drop in Ladenburg Growth'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 |
| Ladenburg Growth vs. Ladenburg Growth | Ladenburg Growth vs. Ladenburg Growth | Ladenburg Growth vs. Ladenburg Growth | Ladenburg Growth vs. Ladenburg Income Fundclass |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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