Correlation Between Amer Beacon and Arrow Managed
Can any of the company-specific risk be diversified away by investing in both Amer Beacon and Arrow Managed 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 Amer Beacon and Arrow Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amer Beacon Ark and Arrow Managed Futures, you can compare the effects of market volatilities on Amer Beacon and Arrow Managed 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 Amer Beacon with a short position of Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Beacon and Arrow Managed.
Diversification Opportunities for Amer Beacon and Arrow Managed
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amer and Arrow is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Amer Beacon Ark and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures and Amer 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 Amer Beacon Ark are associated (or correlated) with Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of Amer Beacon i.e., Amer Beacon and Arrow Managed go up and down completely randomly.
Pair Corralation between Amer Beacon and Arrow Managed
Assuming the 90 days horizon Amer Beacon Ark is expected to generate 1.49 times more return on investment than Arrow Managed. However, Amer Beacon is 1.49 times more volatile than Arrow Managed Futures. It trades about 0.05 of its potential returns per unit of risk. Arrow Managed Futures is currently generating about -0.01 per unit of risk. If you would invest 1,185 in Amer Beacon Ark on September 2, 2024 and sell it today you would earn a total of 409.00 from holding Amer Beacon Ark or generate 34.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amer Beacon Ark vs. Arrow Managed Futures
Performance |
| Timeline |
| Amer Beacon Ark |
| Arrow Managed Futures |
Amer Beacon and Arrow Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amer Beacon and Arrow Managed
The main advantage of trading using opposite Amer Beacon and Arrow Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amer Beacon position performs unexpectedly, Arrow Managed 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 Arrow Managed will offset losses from the drop in Arrow Managed's long position.| Amer Beacon vs. Amer Beacon Ark | Amer Beacon vs. American Beacon Large | Amer Beacon vs. American Beacon Ark | Amer Beacon vs. American Beacon Ark |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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