Correlation Between Amer Beacon and Firsthand Alternative
Can any of the company-specific risk be diversified away by investing in both Amer Beacon and Firsthand Alternative 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 Firsthand Alternative 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 Firsthand Alternative Energy, you can compare the effects of market volatilities on Amer Beacon and Firsthand Alternative 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 Firsthand Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Beacon and Firsthand Alternative.
Diversification Opportunities for Amer Beacon and Firsthand Alternative
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amer and Firsthand is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Amer Beacon Ark and Firsthand Alternative Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Alternative 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 Firsthand Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Alternative has no effect on the direction of Amer Beacon i.e., Amer Beacon and Firsthand Alternative go up and down completely randomly.
Pair Corralation between Amer Beacon and Firsthand Alternative
Assuming the 90 days horizon Amer Beacon Ark is expected to generate 1.7 times more return on investment than Firsthand Alternative. However, Amer Beacon is 1.7 times more volatile than Firsthand Alternative Energy. It trades about -0.05 of its potential returns per unit of risk. Firsthand Alternative Energy is currently generating about -0.32 per unit of risk. If you would invest 1,625 in Amer Beacon Ark on November 28, 2024 and sell it today you would lose (43.00) from holding Amer Beacon Ark or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amer Beacon Ark vs. Firsthand Alternative Energy
Performance |
| Timeline |
| Amer Beacon Ark |
| Firsthand Alternative |
Amer Beacon and Firsthand Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amer Beacon and Firsthand Alternative
The main advantage of trading using opposite Amer Beacon and Firsthand Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amer Beacon position performs unexpectedly, Firsthand Alternative 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 Firsthand Alternative will offset losses from the drop in Firsthand Alternative's long position.| Amer Beacon vs. Ridgeworth Innovative Growth | Amer Beacon vs. Mid Cap Growth | Amer Beacon vs. Small Pany Growth | Amer Beacon vs. Morgan Stanley Multi |
| Firsthand Alternative vs. Guinness Atkinson Alternative | Firsthand Alternative vs. Calvert Global Energy | Firsthand Alternative vs. New Alternatives Fund | Firsthand Alternative vs. Shelton Green Alpha |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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