Correlation Between Vela Large and American Balanced
Can any of the company-specific risk be diversified away by investing in both Vela Large and American Balanced 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 Vela Large and American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vela Large Cap and American Balanced Fund, you can compare the effects of market volatilities on Vela Large and American Balanced 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 Vela Large with a short position of American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vela Large and American Balanced.
Diversification Opportunities for Vela Large and American Balanced
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VELA and American is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vela Large Cap and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced and Vela Large 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 Vela Large Cap are associated (or correlated) with American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of Vela Large i.e., Vela Large and American Balanced go up and down completely randomly.
Pair Corralation between Vela Large and American Balanced
Assuming the 90 days horizon Vela Large Cap is expected to generate 0.93 times more return on investment than American Balanced. However, Vela Large Cap is 1.07 times less risky than American Balanced. It trades about 0.15 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.13 per unit of risk. If you would invest 1,635 in Vela Large Cap on September 3, 2024 and sell it today you would earn a total of 184.00 from holding Vela Large Cap or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vela Large Cap vs. American Balanced Fund
Performance |
| Timeline |
| Vela Large Cap |
| American Balanced |
Vela Large and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vela Large and American Balanced
The main advantage of trading using opposite Vela Large and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vela Large position performs unexpectedly, American Balanced 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 American Balanced will offset losses from the drop in American Balanced's long position.| Vela Large vs. Matson Money Equity | Vela Large vs. Prudential Government Money | Vela Large vs. John Hancock Money | Vela Large vs. Schwab Treasury Money |
| American Balanced vs. Transamerica Large Cap | American Balanced vs. Fidelity Series 1000 | American Balanced vs. Vela Large Cap | American Balanced vs. Qs Large Cap |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |