Correlation Between Astar and American Beacon
Can any of the company-specific risk be diversified away by investing in both Astar 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 Astar and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and American Beacon Shapiro, you can compare the effects of market volatilities on Astar 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 Astar with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and American Beacon.
Diversification Opportunities for Astar and American Beacon
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Astar and American is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Astar and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro and Astar 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 Astar 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 Shapiro has no effect on the direction of Astar i.e., Astar and American Beacon go up and down completely randomly.
Pair Corralation between Astar and American Beacon
Assuming the 90 days trading horizon Astar is expected to generate 7.93 times more return on investment than American Beacon. However, Astar is 7.93 times more volatile than American Beacon Shapiro. It trades about 0.01 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about 0.02 per unit of risk. If you would invest 7.90 in Astar on November 2, 2024 and sell it today you would lose (2.93) from holding Astar or give up 37.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.32% |
| Values | Daily Returns |
Astar vs. American Beacon Shapiro
Performance |
| Timeline |
| Astar |
| American Beacon Shapiro |
Astar and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and American Beacon
The main advantage of trading using opposite Astar and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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.The idea behind Astar and American Beacon Shapiro pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| American Beacon vs. Wilmington Diversified Income | American Beacon vs. Lord Abbett Diversified | American Beacon vs. Global Diversified Income | American Beacon vs. Schwab Small Cap Index |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |