Correlation Between Large Pany and American Beacon
Can any of the company-specific risk be diversified away by investing in both Large Pany 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 Large Pany and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Pany Value and American Beacon Intl, you can compare the effects of market volatilities on Large Pany 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 Large Pany with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Pany and American Beacon.
Diversification Opportunities for Large Pany and American Beacon
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Large and American is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Large Pany Value and American Beacon Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Intl and Large Pany 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 Large Pany Value 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 Intl has no effect on the direction of Large Pany i.e., Large Pany and American Beacon go up and down completely randomly.
Pair Corralation between Large Pany and American Beacon
Assuming the 90 days horizon Large Pany is expected to generate 1.43 times less return on investment than American Beacon. But when comparing it to its historical volatility, Large Pany Value is 1.3 times less risky than American Beacon. It trades about 0.06 of its potential returns per unit of risk. American Beacon Intl is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,484 in American Beacon Intl on September 12, 2024 and sell it today you would earn a total of 456.00 from holding American Beacon Intl or generate 30.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Pany Value vs. American Beacon Intl
Performance |
| Timeline |
| Large Pany Value |
| American Beacon Intl |
Large Pany and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Pany and American Beacon
The main advantage of trading using opposite Large Pany and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Pany 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.| Large Pany vs. Vanguard Value Index | Large Pany vs. Dodge Cox Stock | Large Pany vs. American Mutual Fund | Large Pany vs. American Funds American |
| American Beacon vs. Amg River Road | American Beacon vs. Great West Loomis Sayles | American Beacon vs. Omni Small Cap Value | American Beacon vs. Palm Valley Capital |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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