Correlation Between American Balanced and Guidepath(r) Multi-asset
Can any of the company-specific risk be diversified away by investing in both American Balanced and Guidepath(r) Multi-asset 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 American Balanced and Guidepath(r) Multi-asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced Fund and Guidepath Multi Asset Income, you can compare the effects of market volatilities on American Balanced and Guidepath(r) Multi-asset 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 American Balanced with a short position of Guidepath(r) Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Guidepath(r) Multi-asset.
Diversification Opportunities for American Balanced and Guidepath(r) Multi-asset
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Guidepath(r) is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Guidepath Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath(r) Multi-asset and American Balanced 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 American Balanced Fund are associated (or correlated) with Guidepath(r) Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath(r) Multi-asset has no effect on the direction of American Balanced i.e., American Balanced and Guidepath(r) Multi-asset go up and down completely randomly.
Pair Corralation between American Balanced and Guidepath(r) Multi-asset
Assuming the 90 days horizon American Balanced Fund is expected to generate 1.07 times more return on investment than Guidepath(r) Multi-asset. However, American Balanced is 1.07 times more volatile than Guidepath Multi Asset Income. It trades about 0.27 of its potential returns per unit of risk. Guidepath Multi Asset Income is currently generating about 0.24 per unit of risk. If you would invest 3,477 in American Balanced Fund on May 26, 2025 and sell it today you would earn a total of 246.00 from holding American Balanced Fund or generate 7.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Balanced Fund vs. Guidepath Multi Asset Income
Performance |
Timeline |
American Balanced |
Guidepath(r) Multi-asset |
American Balanced and Guidepath(r) Multi-asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Balanced and Guidepath(r) Multi-asset
The main advantage of trading using opposite American Balanced and Guidepath(r) Multi-asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Guidepath(r) Multi-asset 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 Guidepath(r) Multi-asset will offset losses from the drop in Guidepath(r) Multi-asset's long position.American Balanced vs. Balanced Fund Retail | American Balanced vs. Ab Value Fund | American Balanced vs. Iaadx | American Balanced vs. Aam Select Income |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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