Correlation Between American Beacon and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both American Beacon and Nasdaq 100 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 Nasdaq 100 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on American Beacon and Nasdaq 100 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 Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Nasdaq 100.
Diversification Opportunities for American Beacon and Nasdaq 100
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Nasdaq is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Small and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of American Beacon i.e., American Beacon and Nasdaq 100 go up and down completely randomly.
Pair Corralation between American Beacon and Nasdaq 100
Assuming the 90 days horizon American Beacon Small is expected to generate 0.74 times more return on investment than Nasdaq 100. However, American Beacon Small is 1.35 times less risky than Nasdaq 100. It trades about 0.18 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.08 per unit of risk. If you would invest 2,238 in American Beacon Small on August 26, 2024 and sell it today you would earn a total of 148.00 from holding American Beacon Small or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Small vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| American Beacon Small |
| Nasdaq 100 2x |
American Beacon and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Nasdaq 100
The main advantage of trading using opposite American Beacon and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.| American Beacon vs. Nasdaq 100 2x Strategy | American Beacon vs. Black Oak Emerging | American Beacon vs. Ep Emerging Markets | American Beacon vs. Franklin Emerging Market |
| Nasdaq 100 vs. Nasdaq 100 2x Strategy | Nasdaq 100 vs. Direxion Monthly Nasdaq 100 | Nasdaq 100 vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq 100 vs. Nasdaq 100 2x Strategy |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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