Correlation Between Blackrock Moderate and American Beacon
Can any of the company-specific risk be diversified away by investing in both Blackrock Moderate 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 Blackrock Moderate and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Moderate Prepared and American Beacon Bridgeway, you can compare the effects of market volatilities on Blackrock Moderate 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 Blackrock Moderate with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Moderate and American Beacon.
Diversification Opportunities for Blackrock Moderate and American Beacon
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Blackrock and American is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Moderate Prepared and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway and Blackrock Moderate 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 Blackrock Moderate Prepared 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 Bridgeway has no effect on the direction of Blackrock Moderate i.e., Blackrock Moderate and American Beacon go up and down completely randomly.
Pair Corralation between Blackrock Moderate and American Beacon
Assuming the 90 days horizon Blackrock Moderate is expected to generate 1.14 times less return on investment than American Beacon. But when comparing it to its historical volatility, Blackrock Moderate Prepared is 1.83 times less risky than American Beacon. It trades about 0.12 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,348 in American Beacon Bridgeway on September 14, 2024 and sell it today you would earn a total of 434.00 from holding American Beacon Bridgeway or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Blackrock Moderate Prepared vs. American Beacon Bridgeway
Performance |
| Timeline |
| Blackrock Moderate |
| American Beacon Bridgeway |
Blackrock Moderate and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Moderate and American Beacon
The main advantage of trading using opposite Blackrock Moderate and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Moderate 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.| Blackrock Moderate vs. Quantitative Longshort Equity | Blackrock Moderate vs. Delaware Investments Ultrashort | Blackrock Moderate vs. Barings Active Short | Blackrock Moderate vs. Dreyfus Short Intermediate |
| American Beacon vs. Blackrock Moderate Prepared | American Beacon vs. Qs Moderate Growth | American Beacon vs. Strategic Allocation Moderate | American Beacon vs. Sa Worldwide Moderate |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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