Correlation Between American Beacon and Fidelity Low-priced
Can any of the company-specific risk be diversified away by investing in both American Beacon and Fidelity Low-priced 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 Beacon and Fidelity Low-priced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon International and Fidelity Low Priced Stock, you can compare the effects of market volatilities on American Beacon and Fidelity Low-priced 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 Beacon with a short position of Fidelity Low-priced. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Fidelity Low-priced.
Diversification Opportunities for American Beacon and Fidelity Low-priced
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Fidelity is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon International and Fidelity Low Priced Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Low Priced and American Beacon 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 Beacon International are associated (or correlated) with Fidelity Low-priced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Low Priced has no effect on the direction of American Beacon i.e., American Beacon and Fidelity Low-priced go up and down completely randomly.
Pair Corralation between American Beacon and Fidelity Low-priced
Assuming the 90 days horizon American Beacon is expected to generate 1.1 times less return on investment than Fidelity Low-priced. In addition to that, American Beacon is 1.07 times more volatile than Fidelity Low Priced Stock. It trades about 0.06 of its total potential returns per unit of risk. Fidelity Low Priced Stock is currently generating about 0.07 per unit of volatility. If you would invest 3,480 in Fidelity Low Priced Stock on September 3, 2024 and sell it today you would earn a total of 1,026 from holding Fidelity Low Priced Stock or generate 29.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon International vs. Fidelity Low Priced Stock
Performance |
| Timeline |
| American Beacon Inte |
| Fidelity Low Priced |
American Beacon and Fidelity Low-priced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Fidelity Low-priced
The main advantage of trading using opposite American Beacon and Fidelity Low-priced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Fidelity Low-priced 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 Fidelity Low-priced will offset losses from the drop in Fidelity Low-priced's long position.| American Beacon vs. American Beacon Small | American Beacon vs. American Beacon Balanced | American Beacon vs. American Beacon Large | American Beacon vs. American Beacon Small |
| Fidelity Low-priced vs. Transamerica Large Cap | Fidelity Low-priced vs. Fidelity Series 1000 | Fidelity Low-priced vs. Vanguard Windsor Fund | Fidelity Low-priced vs. Qs Large Cap |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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