Correlation Between American Balanced and Hartford Moderate
Can any of the company-specific risk be diversified away by investing in both American Balanced and Hartford Moderate 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 Hartford Moderate 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 Hartford Moderate Allocation, you can compare the effects of market volatilities on American Balanced and Hartford Moderate 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 Hartford Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Hartford Moderate.
Diversification Opportunities for American Balanced and Hartford Moderate
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Hartford is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Hartford Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Moderate 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 Hartford Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Moderate has no effect on the direction of American Balanced i.e., American Balanced and Hartford Moderate go up and down completely randomly.
Pair Corralation between American Balanced and Hartford Moderate
Assuming the 90 days horizon American Balanced Fund is expected to generate 1.15 times more return on investment than Hartford Moderate. However, American Balanced is 1.15 times more volatile than Hartford Moderate Allocation. It trades about 0.17 of its potential returns per unit of risk. Hartford Moderate Allocation is currently generating about 0.18 per unit of risk. If you would invest 3,437 in American Balanced Fund on November 4, 2024 and sell it today you would earn a total of 72.00 from holding American Balanced Fund or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced Fund vs. Hartford Moderate Allocation
Performance |
| Timeline |
| American Balanced |
| Hartford Moderate |
American Balanced and Hartford Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Hartford Moderate
The main advantage of trading using opposite American Balanced and Hartford Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Hartford Moderate 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 Hartford Moderate will offset losses from the drop in Hartford Moderate's long position.| American Balanced vs. Income Fund Of | American Balanced vs. American Funds 2015 | American Balanced vs. New World Fund | American Balanced vs. American Mutual 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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