Correlation Between Balanced Fund and Us Small
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Us Small 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 Us Small 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 Us Small Cap, you can compare the effects of market volatilities on Balanced Fund and Us Small 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 Us Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Us Small.
Diversification Opportunities for Balanced Fund and Us Small
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Balanced and RLESX is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Us Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Small Cap 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 Us Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Small Cap has no effect on the direction of Balanced Fund i.e., Balanced Fund and Us Small go up and down completely randomly.
Pair Corralation between Balanced Fund and Us Small
Assuming the 90 days horizon Balanced Fund Investor is expected to generate 0.45 times more return on investment than Us Small. However, Balanced Fund Investor is 2.23 times less risky than Us Small. It trades about -0.05 of its potential returns per unit of risk. Us Small Cap is currently generating about -0.24 per unit of risk. If you would invest 1,997 in Balanced Fund Investor on November 28, 2024 and sell it today you would lose (10.00) from holding Balanced Fund Investor or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Balanced Fund Investor vs. Us Small Cap
Performance |
| Timeline |
| Balanced Fund Investor |
| Us Small Cap |
Balanced Fund and Us Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Us Small
The main advantage of trading using opposite Balanced Fund and Us Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Us Small 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 Us Small will offset losses from the drop in Us Small'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 |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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