Correlation Between American Balanced and Origin Emerging
Can any of the company-specific risk be diversified away by investing in both American Balanced and Origin Emerging 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 Origin Emerging 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 Origin Emerging Markets, you can compare the effects of market volatilities on American Balanced and Origin Emerging 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 Origin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Origin Emerging.
Diversification Opportunities for American Balanced and Origin Emerging
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Origin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Origin Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Emerging Markets 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 Origin Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Emerging Markets has no effect on the direction of American Balanced i.e., American Balanced and Origin Emerging go up and down completely randomly.
Pair Corralation between American Balanced and Origin Emerging
Assuming the 90 days horizon American Balanced is expected to generate 1.03 times less return on investment than Origin Emerging. But when comparing it to its historical volatility, American Balanced Fund is 1.8 times less risky than Origin Emerging. It trades about 0.12 of its potential returns per unit of risk. Origin Emerging Markets is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 909.00 in Origin Emerging Markets on September 12, 2024 and sell it today you would earn a total of 147.00 from holding Origin Emerging Markets or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced Fund vs. Origin Emerging Markets
Performance |
| Timeline |
| American Balanced |
| Origin Emerging Markets |
American Balanced and Origin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Origin Emerging
The main advantage of trading using opposite American Balanced and Origin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Origin Emerging 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 Origin Emerging will offset losses from the drop in Origin Emerging's long position.| American Balanced vs. Origin Emerging Markets | American Balanced vs. Doubleline Emerging Markets | American Balanced vs. Black Oak Emerging | American Balanced vs. Barings Emerging Markets |
| Origin Emerging vs. American Funds New | Origin Emerging vs. SCOR PK | Origin Emerging vs. Morningstar Unconstrained Allocation | Origin Emerging vs. Via Renewables |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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