Correlation Between Alger Responsible and American Beacon
Can any of the company-specific risk be diversified away by investing in both Alger Responsible 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 Alger Responsible and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Responsible Investing and American Beacon International, you can compare the effects of market volatilities on Alger Responsible 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 Alger Responsible with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Responsible and American Beacon.
Diversification Opportunities for Alger Responsible and American Beacon
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alger and American is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alger Responsible Investing and American Beacon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Inte and Alger Responsible 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 Alger Responsible Investing 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 Inte has no effect on the direction of Alger Responsible i.e., Alger Responsible and American Beacon go up and down completely randomly.
Pair Corralation between Alger Responsible and American Beacon
Assuming the 90 days horizon Alger Responsible Investing is expected to generate 1.33 times more return on investment than American Beacon. However, Alger Responsible is 1.33 times more volatile than American Beacon International. It trades about 0.09 of its potential returns per unit of risk. American Beacon International is currently generating about -0.03 per unit of risk. If you would invest 1,705 in Alger Responsible Investing on September 1, 2024 and sell it today you would earn a total of 210.00 from holding Alger Responsible Investing or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Responsible Investing vs. American Beacon International
Performance |
| Timeline |
| Alger Responsible |
| American Beacon Inte |
Alger Responsible and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Responsible and American Beacon
The main advantage of trading using opposite Alger Responsible and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Responsible 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.| Alger Responsible vs. Alger Midcap Growth | Alger Responsible vs. Alger Midcap Growth | Alger Responsible vs. Alger Mid Cap | Alger Responsible vs. Alger Small Cap |
| American Beacon vs. American Beacon Large | American Beacon vs. Large Pany Value | American Beacon vs. American Beacon Balanced | American Beacon vs. American Beacon Small |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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