Correlation Between American Beacon and First American
Can any of the company-specific risk be diversified away by investing in both American Beacon and First American 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 First American 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 First American Investment, you can compare the effects of market volatilities on American Beacon and First American 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 First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and First American.
Diversification Opportunities for American Beacon and First American
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Small and First American Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Investment 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 First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Investment has no effect on the direction of American Beacon i.e., American Beacon and First American go up and down completely randomly.
Pair Corralation between American Beacon and First American
Assuming the 90 days horizon American Beacon is expected to generate 1.38 times less return on investment than First American. But when comparing it to its historical volatility, American Beacon Small is 1.01 times less risky than First American. It trades about 0.08 of its potential returns per unit of risk. First American Investment is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,987 in First American Investment on September 1, 2024 and sell it today you would earn a total of 604.00 from holding First American Investment or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Small vs. First American Investment
Performance |
| Timeline |
| American Beacon Small |
| First American Investment |
American Beacon and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and First American
The main advantage of trading using opposite American Beacon and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.| American Beacon vs. American Beacon International | American Beacon vs. American Beacon Large | American Beacon vs. Fidelity Low Priced Stock | American Beacon vs. Europacific Growth Fund |
| First American vs. Nuveen Mid Cap | First American vs. Nuveen Mid Cap | First American vs. Nuveen Small Cap | First American vs. Nuveen Small Cap |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |