Correlation Between American Balanced and Moderately Aggressive
Can any of the company-specific risk be diversified away by investing in both American Balanced and Moderately Aggressive 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 Moderately Aggressive 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 Moderately Aggressive Balanced, you can compare the effects of market volatilities on American Balanced and Moderately Aggressive 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 Moderately Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Moderately Aggressive.
Diversification Opportunities for American Balanced and Moderately Aggressive
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Moderately is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Moderately Aggressive Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderately Aggressive 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 Moderately Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderately Aggressive has no effect on the direction of American Balanced i.e., American Balanced and Moderately Aggressive go up and down completely randomly.
Pair Corralation between American Balanced and Moderately Aggressive
Assuming the 90 days horizon American Balanced is expected to generate 2.05 times less return on investment than Moderately Aggressive. But when comparing it to its historical volatility, American Balanced Fund is 1.23 times less risky than Moderately Aggressive. It trades about 0.14 of its potential returns per unit of risk. Moderately Aggressive Balanced is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,211 in Moderately Aggressive Balanced on August 29, 2024 and sell it today you would earn a total of 39.00 from holding Moderately Aggressive Balanced or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Balanced Fund vs. Moderately Aggressive Balanced
Performance |
| Timeline |
| American Balanced |
| Moderately Aggressive |
American Balanced and Moderately Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Moderately Aggressive
The main advantage of trading using opposite American Balanced and Moderately Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Moderately Aggressive 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 Moderately Aggressive will offset losses from the drop in Moderately Aggressive's long position.| American Balanced vs. Nebraska Municipal Fund | American Balanced vs. Ambrus Core Bond | American Balanced vs. Sterling Capital Short | American Balanced vs. California Bond Fund |
| Moderately Aggressive vs. American Balanced Fund | Moderately Aggressive vs. American Balanced Fund | Moderately Aggressive vs. HUMANA INC | Moderately Aggressive vs. Aquagold International |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |