Correlation Between American Balanced and Hartford Balanced
Can any of the company-specific risk be diversified away by investing in both American Balanced and Hartford Balanced 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 Hartford Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced Fund and The Hartford Balanced, you can compare the effects of market volatilities on American Balanced and Hartford Balanced 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 Hartford Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Hartford Balanced.
Diversification Opportunities for American Balanced and Hartford Balanced
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Hartford is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and The Hartford Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Balanced 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 Fund are associated (or correlated) with Hartford Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Balanced has no effect on the direction of American Balanced i.e., American Balanced and Hartford Balanced go up and down completely randomly.
Pair Corralation between American Balanced and Hartford Balanced
Assuming the 90 days horizon American Balanced Fund is expected to generate 1.25 times more return on investment than Hartford Balanced. However, American Balanced is 1.25 times more volatile than The Hartford Balanced. It trades about 0.11 of its potential returns per unit of risk. The Hartford Balanced is currently generating about 0.08 per unit of risk. If you would invest 2,854 in American Balanced Fund on September 1, 2024 and sell it today you would earn a total of 838.00 from holding American Balanced Fund or generate 29.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced Fund vs. The Hartford Balanced
Performance |
| Timeline |
| American Balanced |
| Hartford Balanced |
American Balanced and Hartford Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Hartford Balanced
The main advantage of trading using opposite American Balanced and Hartford Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Hartford Balanced 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 Hartford Balanced will offset losses from the drop in Hartford Balanced's long position.| American Balanced vs. Scharf Fund Retail | American Balanced vs. Small Cap Equity | American Balanced vs. Calamos Global Equity | American Balanced vs. Rbc Global Equity |
| Hartford Balanced vs. M Large Cap | Hartford Balanced vs. Transamerica Large Cap | Hartford Balanced vs. Qs Large Cap | Hartford Balanced vs. Large Cap Growth Profund |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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