Correlation Between American Balanced and Ladenburg Income

Can any of the company-specific risk be diversified away by investing in both American Balanced and Ladenburg Income 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 Ladenburg Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Balanced and Ladenburg Income Growth, you can compare the effects of market volatilities on American Balanced and Ladenburg Income 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 Ladenburg Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Ladenburg Income.

Diversification Opportunities for American Balanced and Ladenburg Income

0.81

Correlation Coefficient

American Balanced  Ladenburg Income

Very poor diversification

The 3 months correlation between American and Ladenburg is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Ladenburg Income Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Income Growth 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 are associated (or correlated) with Ladenburg Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Income Growth has no effect on the direction of American Balanced i.e., American Balanced and Ladenburg Income go up and down completely randomly.

Pair Corralation between American Balanced and Ladenburg Income

Assuming the 90 days horizon American Balanced is expected to under-perform the Ladenburg Income. In addition to that, American Balanced is 2.15 times more volatile than Ladenburg Income Growth. It trades about -0.03 of its total potential returns per unit of risk. Ladenburg Income Growth is currently generating about 0.03 per unit of volatility. If you would invest  1,339  in Ladenburg Income Growth on September 17, 2024 and sell it today you would earn a total of  10.00  from holding Ladenburg Income Growth or generate 0.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

American Balanced  vs.  Ladenburg Income Growth

American Balanced

Risk-Adjusted Performance

0 of 100

OK

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

Ladenburg Income Growth

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ladenburg Income Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ladenburg Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Balanced and Ladenburg Income

The main advantage of trading using opposite American Balanced and Ladenburg Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Ladenburg Income 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 Ladenburg Income will offset losses from the drop in Ladenburg Income's long position.

The idea behind American Balanced and Ladenburg Income Growth 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.