Correlation Between American Beacon and Precious Metals
Can any of the company-specific risk be diversified away by investing in both American Beacon and Precious Metals 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 Precious Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Ahl and Precious Metals And, you can compare the effects of market volatilities on American Beacon and Precious Metals 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 Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Precious Metals.
Diversification Opportunities for American Beacon and Precious Metals
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Precious is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Ahl and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And 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 Ahl are associated (or correlated) with Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of American Beacon i.e., American Beacon and Precious Metals go up and down completely randomly.
Pair Corralation between American Beacon and Precious Metals
Assuming the 90 days horizon American Beacon Ahl is expected to generate 0.27 times more return on investment than Precious Metals. However, American Beacon Ahl is 3.66 times less risky than Precious Metals. It trades about 0.12 of its potential returns per unit of risk. Precious Metals And is currently generating about -0.02 per unit of risk. If you would invest 1,099 in American Beacon Ahl on September 12, 2024 and sell it today you would earn a total of 38.00 from holding American Beacon Ahl or generate 3.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
American Beacon Ahl vs. Precious Metals And
Performance |
| Timeline |
| American Beacon Ahl |
| Precious Metals And |
American Beacon and Precious Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Precious Metals
The main advantage of trading using opposite American Beacon and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Precious Metals 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 Precious Metals will offset losses from the drop in Precious Metals' long position.| American Beacon vs. Sa Real Estate | American Beacon vs. Vy Clarion Real | American Beacon vs. Forum Real Estate | American Beacon vs. Pender Real Estate |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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