Correlation Between American Balanced and Pfg Janus
Can any of the company-specific risk be diversified away by investing in both American Balanced and Pfg Janus 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 Pfg Janus 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 Pfg Janus Henderson, you can compare the effects of market volatilities on American Balanced and Pfg Janus 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 Pfg Janus. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Pfg Janus.
Diversification Opportunities for American Balanced and Pfg Janus
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Pfg is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Pfg Janus Henderson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfg Janus Henderson 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 Pfg Janus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfg Janus Henderson has no effect on the direction of American Balanced i.e., American Balanced and Pfg Janus go up and down completely randomly.
Pair Corralation between American Balanced and Pfg Janus
Assuming the 90 days horizon American Balanced is expected to generate 1.66 times less return on investment than Pfg Janus. But when comparing it to its historical volatility, American Balanced Fund is 1.14 times less risky than Pfg Janus. It trades about 0.12 of its potential returns per unit of risk. Pfg Janus Henderson is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,013 in Pfg Janus Henderson on August 31, 2024 and sell it today you would earn a total of 23.00 from holding Pfg Janus Henderson or generate 2.27% 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. Pfg Janus Henderson
Performance |
| Timeline |
| American Balanced |
| Pfg Janus Henderson |
American Balanced and Pfg Janus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Pfg Janus
The main advantage of trading using opposite American Balanced and Pfg Janus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Pfg Janus 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 Pfg Janus will offset losses from the drop in Pfg Janus' long position.| American Balanced vs. American Funds American | American Balanced vs. American Funds American | American Balanced vs. American Balanced | American Balanced vs. American Balanced Fund |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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