Correlation Between American Balanced and Lgm Risk
Can any of the company-specific risk be diversified away by investing in both American Balanced and Lgm Risk 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 Lgm Risk 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 Lgm Risk Managed, you can compare the effects of market volatilities on American Balanced and Lgm Risk 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 Lgm Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Lgm Risk.
Diversification Opportunities for American Balanced and Lgm Risk
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Lgm is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk Managed 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 Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of American Balanced i.e., American Balanced and Lgm Risk go up and down completely randomly.
Pair Corralation between American Balanced and Lgm Risk
Assuming the 90 days horizon American Balanced Fund is expected to generate 1.66 times more return on investment than Lgm Risk. However, American Balanced is 1.66 times more volatile than Lgm Risk Managed. It trades about 0.29 of its potential returns per unit of risk. Lgm Risk Managed is currently generating about 0.37 per unit of risk. If you would invest 3,585 in American Balanced Fund on September 3, 2024 and sell it today you would earn a total of 105.00 from holding American Balanced Fund or generate 2.93% 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. Lgm Risk Managed
Performance |
| Timeline |
| American Balanced |
| Lgm Risk Managed |
American Balanced and Lgm Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Lgm Risk
The main advantage of trading using opposite American Balanced and Lgm Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Lgm Risk 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 Lgm Risk will offset losses from the drop in Lgm Risk's long position.| American Balanced vs. James Balanced Golden | American Balanced vs. T Rowe Price | American Balanced vs. Large Cap Fund | American Balanced vs. Blackrock Hi Yld |
| Lgm Risk vs. Vanguard California Long Term | Lgm Risk vs. Lind Capital Partners | Lgm Risk vs. T Rowe Price | Lgm Risk vs. T Rowe Price |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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