Correlation Between New Opportunities and American Balanced
Can any of the company-specific risk be diversified away by investing in both New Opportunities 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 New Opportunities and American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Opportunities Fund and American Balanced Fund, you can compare the effects of market volatilities on New Opportunities 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 New Opportunities with a short position of American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Opportunities and American Balanced.
Diversification Opportunities for New Opportunities and American Balanced
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Opportunities Fund and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced and New Opportunities 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 New Opportunities Fund 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 New Opportunities i.e., New Opportunities and American Balanced go up and down completely randomly.
Pair Corralation between New Opportunities and American Balanced
If you would invest (100.00) in New Opportunities Fund on January 20, 2024 and sell it today you would earn a total of 100.00 from holding New Opportunities Fund or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
New Opportunities Fund vs. American Balanced Fund
Performance |
| Timeline |
| New Opportunities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Balanced |
New Opportunities and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Opportunities and American Balanced
The main advantage of trading using opposite New Opportunities and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Opportunities 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.| New Opportunities vs. Ab Centrated Growth | New Opportunities vs. L Abbett Growth | New Opportunities vs. Qs Defensive Growth | New Opportunities vs. Auer Growth Fund |
| American Balanced vs. Income Fund Of | American Balanced vs. New World Fund | American Balanced vs. American Mutual Fund | American Balanced vs. American Mutual 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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