Correlation Between Balanced Fund and Strategic Asset
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Strategic Asset 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 Strategic Asset 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 Strategic Asset Management, you can compare the effects of market volatilities on Balanced Fund and Strategic Asset 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 Strategic Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Strategic Asset.
Diversification Opportunities for Balanced Fund and Strategic Asset
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Strategic is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Strategic Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Asset Mana 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 Strategic Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Asset Mana has no effect on the direction of Balanced Fund i.e., Balanced Fund and Strategic Asset go up and down completely randomly.
Pair Corralation between Balanced Fund and Strategic Asset
Assuming the 90 days horizon Balanced Fund Investor is expected to generate 1.77 times more return on investment than Strategic Asset. However, Balanced Fund is 1.77 times more volatile than Strategic Asset Management. It trades about 0.14 of its potential returns per unit of risk. Strategic Asset Management is currently generating about 0.09 per unit of risk. If you would invest 1,948 in Balanced Fund Investor on September 4, 2024 and sell it today you would earn a total of 80.00 from holding Balanced Fund Investor or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Balanced Fund Investor vs. Strategic Asset Management
Performance |
| Timeline |
| Balanced Fund Investor |
| Strategic Asset Mana |
Balanced Fund and Strategic Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Strategic Asset
The main advantage of trading using opposite Balanced Fund and Strategic Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Strategic Asset 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 Strategic Asset will offset losses from the drop in Strategic Asset'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 |
| Strategic Asset vs. Small Cap Stock | Strategic Asset vs. Balanced Fund Investor | Strategic Asset vs. Eic Value Fund | Strategic Asset vs. Auer Growth Fund |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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