Correlation Between 1ws Credit and American Balanced

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both 1ws Credit 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 1ws Credit and American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1ws Credit Income and American Balanced Fund, you can compare the effects of market volatilities on 1ws Credit 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 1ws Credit with a short position of American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1ws Credit and American Balanced.

Diversification Opportunities for 1ws Credit and American Balanced

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between 1ws and American is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding 1WS Credit Income 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 1ws Credit 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 1ws Credit Income 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 1ws Credit i.e., 1ws Credit and American Balanced go up and down completely randomly.

Pair Corralation between 1ws Credit and American Balanced

Assuming the 90 days horizon 1ws Credit is expected to generate 1.51 times less return on investment than American Balanced. But when comparing it to its historical volatility, 1ws Credit Income is 3.17 times less risky than American Balanced. It trades about 0.25 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,792  in American Balanced Fund on December 29, 2023 and sell it today you would earn a total of  588.00  from holding American Balanced Fund or generate 21.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy99.68%
ValuesDaily Returns

1WS Credit Income  vs.  AMERICAN BALANCED FUND

 Performance 
       Timeline  
1ws Credit Me 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in 1ws Credit Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, 1ws Credit 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 technical and 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.

1ws Credit and American Balanced Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 1ws Credit and American Balanced

The main advantage of trading using opposite 1ws Credit and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1ws Credit 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 1ws Credit Income 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

Other Complementary Tools

Fundamental Analysis
View fundamental data based on most recent published financial statements
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges