Correlation Between Balanced Fund and At Equity
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and At Equity 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 Balanced Fund and At Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and At Equity Income, you can compare the effects of market volatilities on Balanced Fund and At Equity 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 Balanced Fund with a short position of At Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and At Equity.
Diversification Opportunities for Balanced Fund and At Equity
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and AWYIX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and At Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on At Equity Income and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with At Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of At Equity Income has no effect on the direction of Balanced Fund i.e., Balanced Fund and At Equity go up and down completely randomly.
Pair Corralation between Balanced Fund and At Equity
Assuming the 90 days horizon Balanced Fund is expected to generate 2.43 times less return on investment than At Equity. But when comparing it to its historical volatility, Balanced Fund Investor is 1.36 times less risky than At Equity. It trades about 0.14 of its potential returns per unit of risk. At Equity Income is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 6,407 in At Equity Income on August 29, 2024 and sell it today you would earn a total of 284.00 from holding At Equity Income or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Balanced Fund Investor vs. At Equity Income
Performance |
| Timeline |
| Balanced Fund Investor |
| At Equity Income |
Balanced Fund and At Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and At Equity
The main advantage of trading using opposite Balanced Fund and At Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, At Equity 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 At Equity will offset losses from the drop in At Equity's long position.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
| At Equity vs. Nova Fund Class | At Equity vs. Barings Active Short | At Equity vs. Growth Fund Of | At Equity vs. Balanced Fund Investor |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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