Correlation Between American Beacon and Alger Responsible
Can any of the company-specific risk be diversified away by investing in both American Beacon and Alger Responsible 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 Alger Responsible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Small and Alger Responsible Investing, you can compare the effects of market volatilities on American Beacon and Alger Responsible 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 Alger Responsible. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Alger Responsible.
Diversification Opportunities for American Beacon and Alger Responsible
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Alger is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Small and Alger Responsible Investing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Responsible 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 Small are associated (or correlated) with Alger Responsible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Responsible has no effect on the direction of American Beacon i.e., American Beacon and Alger Responsible go up and down completely randomly.
Pair Corralation between American Beacon and Alger Responsible
Assuming the 90 days horizon American Beacon Small is expected to generate 1.46 times more return on investment than Alger Responsible. However, American Beacon is 1.46 times more volatile than Alger Responsible Investing. It trades about 0.22 of its potential returns per unit of risk. Alger Responsible Investing is currently generating about 0.1 per unit of risk. If you would invest 2,495 in American Beacon Small on August 30, 2024 and sell it today you would earn a total of 195.00 from holding American Beacon Small or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Small vs. Alger Responsible Investing
Performance |
| Timeline |
| American Beacon Small |
| Alger Responsible |
American Beacon and Alger Responsible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Alger Responsible
The main advantage of trading using opposite American Beacon and Alger Responsible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Alger Responsible 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 Alger Responsible will offset losses from the drop in Alger Responsible's long position.| American Beacon vs. American Funds 2015 | American Beacon vs. American Mutual Fund | American Beacon vs. American Funds Income | American Beacon vs. American Funds Preservation |
| Alger Responsible vs. Growth Fund Of | Alger Responsible vs. HUMANA INC | Alger Responsible vs. Aquagold International | Alger Responsible vs. Barloworld Ltd ADR |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |