Correlation Between Cohen Steers and American Balanced
Can any of the company-specific risk be diversified away by investing in both Cohen Steers 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 Cohen Steers and American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cohen Steers Infrastructure and American Balanced Fund, you can compare the effects of market volatilities on Cohen Steers 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 Cohen Steers with a short position of American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohen Steers and American Balanced.
Diversification Opportunities for Cohen Steers and American Balanced
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cohen and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cohen Steers Infrastructure and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced and Cohen Steers 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 Cohen Steers Infrastructure 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 Cohen Steers i.e., Cohen Steers and American Balanced go up and down completely randomly.
Pair Corralation between Cohen Steers and American Balanced
Assuming the 90 days horizon Cohen Steers Infrastructure is expected to generate 1.82 times more return on investment than American Balanced. However, Cohen Steers is 1.82 times more volatile than American Balanced Fund. It trades about -0.06 of its potential returns per unit of risk. American Balanced Fund is currently generating about -0.18 per unit of risk. If you would invest 2,260 in Cohen Steers Infrastructure on January 25, 2024 and sell it today you would lose (33.00) from holding Cohen Steers Infrastructure or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cohen Steers Infrastructure vs. American Balanced Fund
Performance |
| Timeline |
| Cohen Steers Infrast |
| American Balanced |
Cohen Steers and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cohen Steers and American Balanced
The main advantage of trading using opposite Cohen Steers and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohen Steers 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.| Cohen Steers vs. Vanguard Total Stock | Cohen Steers vs. Vanguard 500 Index | Cohen Steers vs. Vanguard Total Stock | Cohen Steers vs. Vanguard Total Stock |
| American Balanced vs. Fidelity Strategic Dividend | American Balanced vs. HUMANA INC | American Balanced vs. Aquagold International | American Balanced vs. Morningstar Unconstrained Allocation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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