Correlation Between Abbey Capital and American Beacon
Can any of the company-specific risk be diversified away by investing in both Abbey Capital and American Beacon 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 Abbey Capital and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abbey Capital Futures and American Beacon Ahl, you can compare the effects of market volatilities on Abbey Capital and American Beacon 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 Abbey Capital with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbey Capital and American Beacon.
Diversification Opportunities for Abbey Capital and American Beacon
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Abbey and American is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Abbey Capital Futures and American Beacon Ahl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ahl and Abbey Capital 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 Abbey Capital Futures are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Ahl has no effect on the direction of Abbey Capital i.e., Abbey Capital and American Beacon go up and down completely randomly.
Pair Corralation between Abbey Capital and American Beacon
Assuming the 90 days horizon Abbey Capital Futures is expected to generate 0.83 times more return on investment than American Beacon. However, Abbey Capital Futures is 1.2 times less risky than American Beacon. It trades about 0.0 of its potential returns per unit of risk. American Beacon Ahl is currently generating about -0.06 per unit of risk. If you would invest 1,050 in Abbey Capital Futures on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Abbey Capital Futures or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abbey Capital Futures vs. American Beacon Ahl
Performance |
| Timeline |
| Abbey Capital Futures |
| American Beacon Ahl |
Abbey Capital and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abbey Capital and American Beacon
The main advantage of trading using opposite Abbey Capital and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbey Capital position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Abbey Capital vs. Abbey Capital Multi | Abbey Capital vs. Vanguard 500 Index | Abbey Capital vs. Vanguard Target Retirement | Abbey Capital vs. Fidelity Balanced Fund |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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