Correlation Between American Beacon and Ab Impact
Can any of the company-specific risk be diversified away by investing in both American Beacon and Ab Impact 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 Ab Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Small and Ab Impact Municipal, you can compare the effects of market volatilities on American Beacon and Ab Impact 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 Ab Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Ab Impact.
Diversification Opportunities for American Beacon and Ab Impact
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and ABIMX is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Small and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal 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 Small are associated (or correlated) with Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of American Beacon i.e., American Beacon and Ab Impact go up and down completely randomly.
Pair Corralation between American Beacon and Ab Impact
Assuming the 90 days horizon American Beacon Small is expected to generate 0.58 times more return on investment than Ab Impact. However, American Beacon Small is 1.74 times less risky than Ab Impact. It trades about 0.22 of its potential returns per unit of risk. Ab Impact Municipal is currently generating about 0.08 per unit of risk. If you would invest 1,850 in American Beacon Small on September 12, 2024 and sell it today you would earn a total of 294.00 from holding American Beacon Small or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.43% |
| Values | Daily Returns |
American Beacon Small vs. Ab Impact Municipal
Performance |
| Timeline |
| American Beacon Small |
| Ab Impact Municipal |
American Beacon and Ab Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Ab Impact
The main advantage of trading using opposite American Beacon and Ab Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Ab Impact 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 Ab Impact will offset losses from the drop in Ab Impact's long position.| American Beacon vs. Ab Impact Municipal | American Beacon vs. T Rowe Price | American Beacon vs. Baird Strategic Municipal | American Beacon vs. T Rowe Price |
| Ab Impact vs. SCOR PK | Ab Impact vs. Morningstar Unconstrained Allocation | Ab Impact vs. Thrivent High Yield | Ab Impact vs. Via Renewables |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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