Correlation Between American Beacon and Firsthand Alternative
Can any of the company-specific risk be diversified away by investing in both American 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 American 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 American Beacon Ahl and Firsthand Alternative Energy, you can compare the effects of market volatilities on American 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 American Beacon with a short position of Firsthand Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Firsthand Alternative.
Diversification Opportunities for American Beacon and Firsthand Alternative
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Firsthand is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Ahl and Firsthand Alternative Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Alternative 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 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 American Beacon i.e., American Beacon and Firsthand Alternative go up and down completely randomly.
Pair Corralation between American Beacon and Firsthand Alternative
Assuming the 90 days horizon American Beacon Ahl is expected to under-perform the Firsthand Alternative. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Beacon Ahl is 2.94 times less risky than Firsthand Alternative. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Firsthand Alternative Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 999.00 in Firsthand Alternative Energy on September 3, 2024 and sell it today you would earn a total of 22.00 from holding Firsthand Alternative Energy or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Ahl vs. Firsthand Alternative Energy
Performance |
| Timeline |
| American Beacon Ahl |
| Firsthand Alternative |
American Beacon and Firsthand Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Firsthand Alternative
The main advantage of trading using opposite American Beacon and Firsthand Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American 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.| American Beacon vs. Firsthand Alternative Energy | American Beacon vs. Gamco Natural Resources | American Beacon vs. Tortoise Energy Independence | American Beacon vs. Icon Natural Resources |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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