Correlation Between American Beacon and Virtus Westchester
Can any of the company-specific risk be diversified away by investing in both American Beacon and Virtus Westchester 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 Virtus Westchester 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 Virtus Westchester Credit, you can compare the effects of market volatilities on American Beacon and Virtus Westchester 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 Virtus Westchester. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Virtus Westchester.
Diversification Opportunities for American Beacon and Virtus Westchester
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Virtus is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Ark and Virtus Westchester Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Westchester 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 Virtus Westchester. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Westchester Credit has no effect on the direction of American Beacon i.e., American Beacon and Virtus Westchester go up and down completely randomly.
Pair Corralation between American Beacon and Virtus Westchester
Assuming the 90 days horizon American Beacon Ark is expected to generate 22.23 times more return on investment than Virtus Westchester. However, American Beacon is 22.23 times more volatile than Virtus Westchester Credit. It trades about 0.07 of its potential returns per unit of risk. Virtus Westchester Credit is currently generating about 0.31 per unit of risk. If you would invest 797.00 in American Beacon Ark on September 14, 2024 and sell it today you would earn a total of 831.00 from holding American Beacon Ark or generate 104.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Beacon Ark vs. Virtus Westchester Credit
Performance |
| Timeline |
| American Beacon Ark |
| Virtus Westchester Credit |
American Beacon and Virtus Westchester Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Virtus Westchester
The main advantage of trading using opposite American Beacon and Virtus Westchester positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Virtus Westchester 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 Virtus Westchester will offset losses from the drop in Virtus Westchester's long position.| American Beacon vs. Heartland Value Plus | American Beacon vs. Valic Company I | American Beacon vs. Amg River Road | American Beacon vs. Victory Rs Partners |
| Virtus Westchester vs. Wcm Alternatives Event Driven | Virtus Westchester vs. Wcm Alternatives Event Driven | Virtus Westchester vs. American Beacon Ark | Virtus Westchester vs. Nuveen Missouri Quality |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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