Correlation Between American Beacon and Kentucky Tax
Can any of the company-specific risk be diversified away by investing in both American Beacon and Kentucky Tax 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 Kentucky Tax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Balanced and Kentucky Tax Free Short To Medium, you can compare the effects of market volatilities on American Beacon and Kentucky Tax 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 Kentucky Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Kentucky Tax.
Diversification Opportunities for American Beacon and Kentucky Tax
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Kentucky is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Balanced and Kentucky Tax Free Short To Med in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free 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 Balanced are associated (or correlated) with Kentucky Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of American Beacon i.e., American Beacon and Kentucky Tax go up and down completely randomly.
Pair Corralation between American Beacon and Kentucky Tax
Assuming the 90 days horizon American Beacon Balanced is expected to generate 4.27 times more return on investment than Kentucky Tax. However, American Beacon is 4.27 times more volatile than Kentucky Tax Free Short To Medium. It trades about 0.13 of its potential returns per unit of risk. Kentucky Tax Free Short To Medium is currently generating about 0.11 per unit of risk. If you would invest 1,121 in American Beacon Balanced on September 14, 2024 and sell it today you would earn a total of 203.00 from holding American Beacon Balanced or generate 18.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
American Beacon Balanced vs. Kentucky Tax Free Short To Med
Performance |
| Timeline |
| American Beacon Balanced |
| Kentucky Tax Free |
American Beacon and Kentucky Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Kentucky Tax
The main advantage of trading using opposite American Beacon and Kentucky Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Kentucky Tax 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 Kentucky Tax will offset losses from the drop in Kentucky Tax's long position.| American Beacon vs. Kentucky Tax Free Short To Medium | American Beacon vs. Rbc Short Duration | American Beacon vs. Virtus Multi Sector Short | American Beacon vs. Angel Oak Ultrashort |
| Kentucky Tax vs. Glg Intl Small | Kentucky Tax vs. Cardinal Small Cap | Kentucky Tax vs. Scout Small Cap | Kentucky Tax vs. Siit Small Mid |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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