Correlation Between American Balanced and Option Care
Can any of the company-specific risk be diversified away by investing in both American Balanced and Option Care 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 Option Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Option Care Health, you can compare the effects of market volatilities on American Balanced and Option Care 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 Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Option Care.
Diversification Opportunities for American Balanced and Option Care
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Option is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health 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 Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of American Balanced i.e., American Balanced and Option Care go up and down completely randomly.
Pair Corralation between American Balanced and Option Care
Assuming the 90 days horizon American Balanced is expected to under-perform the Option Care. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Balanced is 3.19 times less risky than Option Care. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Option Care Health is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,313 in Option Care Health on October 23, 2024 and sell it today you would earn a total of 603.00 from holding Option Care Health or generate 26.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced vs. Option Care Health
Performance |
| Timeline |
| American Balanced |
| Option Care Health |
American Balanced and Option Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Option Care
The main advantage of trading using opposite American Balanced and Option Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Option Care 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 Option Care will offset losses from the drop in Option Care'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 |
| Option Care vs. Addus HomeCare | Option Care vs. Acadia Healthcare | Option Care vs. Encompass Health Corp | Option Care vs. Select Medical Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |