Correlation Between American Beacon and Aberdeen Income
Can any of the company-specific risk be diversified away by investing in both American Beacon and Aberdeen Income 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 Aberdeen Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Ark and Aberdeen Income Credit, you can compare the effects of market volatilities on American Beacon and Aberdeen Income 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 Aberdeen Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Aberdeen Income.
Diversification Opportunities for American Beacon and Aberdeen Income
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Aberdeen is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Ark and Aberdeen Income Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Income Credit 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 Ark are associated (or correlated) with Aberdeen Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Income Credit has no effect on the direction of American Beacon i.e., American Beacon and Aberdeen Income go up and down completely randomly.
Pair Corralation between American Beacon and Aberdeen Income
Assuming the 90 days horizon American Beacon Ark is expected to generate 3.59 times more return on investment than Aberdeen Income. However, American Beacon is 3.59 times more volatile than Aberdeen Income Credit. It trades about 0.26 of its potential returns per unit of risk. Aberdeen Income Credit is currently generating about 0.18 per unit of risk. If you would invest 1,520 in American Beacon Ark on November 2, 2024 and sell it today you would earn a total of 175.00 from holding American Beacon Ark or generate 11.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.0% |
Values | Daily Returns |
American Beacon Ark vs. Aberdeen Income Credit
Performance |
Timeline |
American Beacon Ark |
Aberdeen Income Credit |
American Beacon and Aberdeen Income Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Beacon and Aberdeen Income
The main advantage of trading using opposite American Beacon and Aberdeen Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Aberdeen Income 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 Aberdeen Income will offset losses from the drop in Aberdeen Income's long position.American Beacon vs. Franklin Small Cap | American Beacon vs. Smallcap Fund Fka | American Beacon vs. Small Pany Growth | American Beacon vs. Buffalo Small 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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