Correlation Between American Beacon and Locorr Market
Can any of the company-specific risk be diversified away by investing in both American Beacon and Locorr Market 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 Locorr Market 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 Locorr Market Trend, you can compare the effects of market volatilities on American Beacon and Locorr Market 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 Locorr Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Locorr Market.
Diversification Opportunities for American Beacon and Locorr Market
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Locorr is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Ahl and Locorr Market Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Market Trend 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 Locorr Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Market Trend has no effect on the direction of American Beacon i.e., American Beacon and Locorr Market go up and down completely randomly.
Pair Corralation between American Beacon and Locorr Market
Assuming the 90 days horizon American Beacon Ahl is expected to under-perform the Locorr Market. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Beacon Ahl is 1.12 times less risky than Locorr Market. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Locorr Market Trend is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,224 in Locorr Market Trend on August 25, 2024 and sell it today you would lose (91.00) from holding Locorr Market Trend or give up 7.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Beacon Ahl vs. Locorr Market Trend
Performance |
| Timeline |
| American Beacon Ahl |
| Locorr Market Trend |
American Beacon and Locorr Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Locorr Market
The main advantage of trading using opposite American Beacon and Locorr Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Locorr Market 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 Locorr Market will offset losses from the drop in Locorr Market's long position.| American Beacon vs. Asg Managed Futures | American Beacon vs. Pimco Trends Managed | American Beacon vs. American Beacon Ahl | American Beacon vs. Aqr Managed Futures |
| Locorr Market vs. Locorr Longshort Modities | Locorr Market vs. Jhancock Short Duration | Locorr Market vs. Ultra Short Term Fixed | Locorr Market vs. Siit Ultra Short |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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