Correlation Between Mairs Power and American Balanced
Can any of the company-specific risk be diversified away by investing in both Mairs Power 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 Mairs Power and American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mairs Power Balanced and American Balanced Fund, you can compare the effects of market volatilities on Mairs Power 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 Mairs Power with a short position of American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and American Balanced.
Diversification Opportunities for Mairs Power and American Balanced
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mairs and American is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Balanced and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced and Mairs Power 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 Mairs Power Balanced 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 Mairs Power i.e., Mairs Power and American Balanced go up and down completely randomly.
Pair Corralation between Mairs Power and American Balanced
Assuming the 90 days horizon Mairs Power is expected to generate 1.1 times less return on investment than American Balanced. But when comparing it to its historical volatility, Mairs Power Balanced is 1.07 times less risky than American Balanced. It trades about 0.13 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,966 in American Balanced Fund on August 29, 2024 and sell it today you would earn a total of 707.00 from holding American Balanced Fund or generate 23.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mairs Power Balanced vs. American Balanced Fund
Performance |
| Timeline |
| Mairs Power Balanced |
| American Balanced |
Mairs Power and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mairs Power and American Balanced
The main advantage of trading using opposite Mairs Power and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mairs Power 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.| Mairs Power vs. American Balanced Fund | Mairs Power vs. American Balanced Fund | Mairs Power vs. HUMANA INC | Mairs Power vs. Aquagold International |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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