Correlation Between Pax High and American Balanced

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Can any of the company-specific risk be diversified away by investing in both Pax High 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 Pax High and American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax High Yield and American Balanced Fund, you can compare the effects of market volatilities on Pax High 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 Pax High with a short position of American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax High and American Balanced.

Diversification Opportunities for Pax High and American Balanced

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Pax and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PAX HIGH YIELD and AMERICAN BALANCED FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced Fund and Pax High 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 Pax High Yield 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 Fund has no effect on the direction of Pax High i.e., Pax High and American Balanced go up and down completely randomly.

Pair Corralation between Pax High and American Balanced

If you would invest  2,884  in American Balanced Fund on December 29, 2023 and sell it today you would earn a total of  479.00  from holding American Balanced Fund or generate 16.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

PAX HIGH YIELD  vs.  AMERICAN BALANCED FUND

 Performance 
       Timeline  
Pax High Yield 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Pax High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pax High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
American Balanced Fund 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in American Balanced Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, American Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pax High and American Balanced Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pax High and American Balanced

The main advantage of trading using opposite Pax High and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax High 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.
The idea behind Pax High Yield and American Balanced Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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