Correlation Between American Balanced and Loomis Sayles
Can any of the company-specific risk be diversified away by investing in both American Balanced and Loomis Sayles 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 Loomis Sayles 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 Loomis Sayles Global, you can compare the effects of market volatilities on American Balanced and Loomis Sayles 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 Loomis Sayles. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Loomis Sayles.
Diversification Opportunities for American Balanced and Loomis Sayles
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Loomis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Loomis Sayles Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Global 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 Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Global has no effect on the direction of American Balanced i.e., American Balanced and Loomis Sayles go up and down completely randomly.
Pair Corralation between American Balanced and Loomis Sayles
Assuming the 90 days horizon American Balanced Fund is expected to generate 0.62 times more return on investment than Loomis Sayles. However, American Balanced Fund is 1.62 times less risky than Loomis Sayles. It trades about 0.1 of its potential returns per unit of risk. Loomis Sayles Global is currently generating about 0.05 per unit of risk. If you would invest 2,823 in American Balanced Fund on September 2, 2024 and sell it today you would earn a total of 869.00 from holding American Balanced Fund or generate 30.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced Fund vs. Loomis Sayles Global
Performance |
| Timeline |
| American Balanced |
| Loomis Sayles Global |
American Balanced and Loomis Sayles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Loomis Sayles
The main advantage of trading using opposite American Balanced and Loomis Sayles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Loomis Sayles 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 Loomis Sayles will offset losses from the drop in Loomis Sayles' long position.| American Balanced vs. Icon Natural Resources | American Balanced vs. Jennison Natural Resources | American Balanced vs. Goehring Rozencwajg Resources | American Balanced vs. Calvert Global Energy |
| Loomis Sayles vs. First Eagle Global | Loomis Sayles vs. American Balanced Fund | Loomis Sayles vs. Loomis Sayles Strategic | Loomis Sayles vs. Thornburg Investment Income |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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