Correlation Between American Beacon and Arrow Managed
Can any of the company-specific risk be diversified away by investing in both American Beacon and Arrow Managed 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 Arrow Managed 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 Arrow Managed Futures, you can compare the effects of market volatilities on American Beacon and Arrow Managed 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 Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Arrow Managed.
Diversification Opportunities for American Beacon and Arrow Managed
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Arrow is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Ahl and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures 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 Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of American Beacon i.e., American Beacon and Arrow Managed go up and down completely randomly.
Pair Corralation between American Beacon and Arrow Managed
Assuming the 90 days horizon American Beacon Ahl is expected to under-perform the Arrow Managed. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Beacon Ahl is 2.74 times less risky than Arrow Managed. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Arrow Managed Futures is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 575.00 in Arrow Managed Futures on November 28, 2024 and sell it today you would lose (7.00) from holding Arrow Managed Futures or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Ahl vs. Arrow Managed Futures
Performance |
| Timeline |
| American Beacon Ahl |
| Arrow Managed Futures |
American Beacon and Arrow Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Arrow Managed
The main advantage of trading using opposite American Beacon and Arrow Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Arrow Managed 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 Arrow Managed will offset losses from the drop in Arrow Managed'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 |
| Arrow Managed vs. Us Government Securities | Arrow Managed vs. Inverse Government Long | Arrow Managed vs. John Hancock Government | Arrow Managed vs. Us Government Securities |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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