Correlation Between American Beacon and Locorr Dynamic
Can any of the company-specific risk be diversified away by investing in both American Beacon and Locorr Dynamic 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 Locorr Dynamic 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 Locorr Dynamic Equity, you can compare the effects of market volatilities on American Beacon and Locorr Dynamic 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 Locorr Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Locorr Dynamic.
Diversification Opportunities for American Beacon and Locorr Dynamic
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Locorr is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Small and Locorr Dynamic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Dynamic Equity 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 Locorr Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Dynamic Equity has no effect on the direction of American Beacon i.e., American Beacon and Locorr Dynamic go up and down completely randomly.
Pair Corralation between American Beacon and Locorr Dynamic
Assuming the 90 days horizon American Beacon Small is expected to generate 2.97 times more return on investment than Locorr Dynamic. However, American Beacon is 2.97 times more volatile than Locorr Dynamic Equity. It trades about 0.28 of its potential returns per unit of risk. Locorr Dynamic Equity is currently generating about 0.51 per unit of risk. If you would invest 2,457 in American Beacon Small on September 1, 2024 and sell it today you would earn a total of 236.00 from holding American Beacon Small or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Small vs. Locorr Dynamic Equity
Performance |
| Timeline |
| American Beacon Small |
| Locorr Dynamic Equity |
American Beacon and Locorr Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Locorr Dynamic
The main advantage of trading using opposite American Beacon and Locorr Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Locorr Dynamic 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 Locorr Dynamic will offset losses from the drop in Locorr Dynamic's long position.| American Beacon vs. T Rowe Price | American Beacon vs. Strategic Allocation Aggressive | American Beacon vs. T Rowe Price | American Beacon vs. Enhanced Large Pany |
| Locorr Dynamic vs. Locorr Market Trend | Locorr Dynamic vs. Locorr Market Trend | Locorr Dynamic vs. Locorr Spectrum Income | Locorr Dynamic vs. Locorr Spectrum Income |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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