Correlation Between Amer Beacon and American Beacon
Can any of the company-specific risk be diversified away by investing in both Amer Beacon 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 Amer Beacon and American Beacon 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 American Beacon Stephens, you can compare the effects of market volatilities on Amer Beacon 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 Amer Beacon with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Beacon and American Beacon.
Diversification Opportunities for Amer Beacon and American Beacon
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amer and American is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Amer Beacon Ark and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens 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 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 Stephens has no effect on the direction of Amer Beacon i.e., Amer Beacon and American Beacon go up and down completely randomly.
Pair Corralation between Amer Beacon and American Beacon
Assuming the 90 days horizon Amer Beacon Ark is expected to generate 2.37 times more return on investment than American Beacon. However, Amer Beacon is 2.37 times more volatile than American Beacon Stephens. It trades about 0.06 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.08 per unit of risk. If you would invest 1,285 in Amer Beacon Ark on September 3, 2024 and sell it today you would earn a total of 267.00 from holding Amer Beacon Ark or generate 20.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amer Beacon Ark vs. American Beacon Stephens
Performance |
| Timeline |
| Amer Beacon Ark |
| American Beacon Stephens |
Amer Beacon and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amer Beacon and American Beacon
The main advantage of trading using opposite Amer Beacon and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amer Beacon 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.| Amer Beacon vs. T Rowe Price | Amer Beacon vs. T Rowe Price | Amer Beacon vs. T Rowe Price | Amer Beacon vs. T Rowe Price |
| American Beacon vs. T Rowe Price | American Beacon vs. T Rowe Price | American Beacon vs. T Rowe Price | American Beacon vs. T Rowe Price |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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