Correlation Between James Balanced and Global Diversified
Can any of the company-specific risk be diversified away by investing in both James Balanced and Global Diversified 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 James Balanced and Global Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James Balanced Golden and Global Diversified Income, you can compare the effects of market volatilities on James Balanced and Global Diversified 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 James Balanced with a short position of Global Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Balanced and Global Diversified.
Diversification Opportunities for James Balanced and Global Diversified
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between James and Global is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding James Balanced Golden and Global Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Diversified Income and James 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 James Balanced Golden are associated (or correlated) with Global Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Diversified Income has no effect on the direction of James Balanced i.e., James Balanced and Global Diversified go up and down completely randomly.
Pair Corralation between James Balanced and Global Diversified
Assuming the 90 days horizon James Balanced Golden is expected to generate 2.66 times more return on investment than Global Diversified. However, James Balanced is 2.66 times more volatile than Global Diversified Income. It trades about 0.12 of its potential returns per unit of risk. Global Diversified Income is currently generating about 0.21 per unit of risk. If you would invest 2,249 in James Balanced Golden on October 25, 2024 and sell it today you would earn a total of 25.00 from holding James Balanced Golden or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
James Balanced Golden vs. Global Diversified Income
Performance |
| Timeline |
| James Balanced Golden |
| Global Diversified Income |
James Balanced and Global Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James Balanced and Global Diversified
The main advantage of trading using opposite James Balanced and Global Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Balanced position performs unexpectedly, Global Diversified 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 Global Diversified will offset losses from the drop in Global Diversified's long position.| James Balanced vs. Permanent Portfolio Class | James Balanced vs. Berwyn Income Fund | James Balanced vs. Large Cap Fund | James Balanced vs. Westcore Plus Bond |
| Global Diversified vs. Fidelity Focused High | Global Diversified vs. Mesirow Financial High | Global Diversified vs. Transamerica High Yield | Global Diversified vs. Ab High 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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