Correlation Between Catholic Responsible and American Balanced
Can any of the company-specific risk be diversified away by investing in both Catholic Responsible and American 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 Catholic Responsible and American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catholic Responsible Investments and American Balanced, you can compare the effects of market volatilities on Catholic Responsible and American 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 Catholic Responsible with a short position of American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catholic Responsible and American Balanced.
Diversification Opportunities for Catholic Responsible and American Balanced
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Catholic and American is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Catholic Responsible Investmen and American Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced and Catholic Responsible 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 Catholic Responsible Investments are associated (or correlated) with American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of Catholic Responsible i.e., Catholic Responsible and American Balanced go up and down completely randomly.
Pair Corralation between Catholic Responsible and American Balanced
Assuming the 90 days horizon Catholic Responsible is expected to generate 1.21 times less return on investment than American Balanced. But when comparing it to its historical volatility, Catholic Responsible Investments is 1.07 times less risky than American Balanced. It trades about 0.13 of its potential returns per unit of risk. American Balanced is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,039 in American Balanced on September 2, 2024 and sell it today you would earn a total of 655.00 from holding American Balanced or generate 21.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catholic Responsible Investmen vs. American Balanced
Performance |
| Timeline |
| Catholic Responsible |
| American Balanced |
Catholic Responsible and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catholic Responsible and American Balanced
The main advantage of trading using opposite Catholic Responsible and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catholic Responsible position performs unexpectedly, American 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 American Balanced will offset losses from the drop in American Balanced's long position.The idea behind Catholic Responsible Investments and American Balanced pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |