Correlation Between Ultra Small and American Beacon
Can any of the company-specific risk be diversified away by investing in both Ultra Small 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 Ultra Small and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Small Pany Market and American Beacon Bridgeway, you can compare the effects of market volatilities on Ultra Small 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 Ultra Small with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Small and American Beacon.
Diversification Opportunities for Ultra Small and American Beacon
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ultra and American is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Small Pany Market 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 Ultra Small 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 Ultra Small Pany Market 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 Ultra Small i.e., Ultra Small and American Beacon go up and down completely randomly.
Pair Corralation between Ultra Small and American Beacon
Assuming the 90 days horizon Ultra Small Pany Market is expected to under-perform the American Beacon. In addition to that, Ultra Small is 2.24 times more volatile than American Beacon Bridgeway. It trades about -0.18 of its total potential returns per unit of risk. American Beacon Bridgeway is currently generating about -0.14 per unit of volatility. If you would invest 2,414 in American Beacon Bridgeway on November 27, 2024 and sell it today you would lose (43.00) from holding American Beacon Bridgeway or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Small Pany Market vs. American Beacon Bridgeway
Performance |
| Timeline |
| Ultra Small Pany |
| American Beacon Bridgeway |
Ultra Small and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Small and American Beacon
The main advantage of trading using opposite Ultra Small and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Small 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.| Ultra Small vs. Ultra Small Pany Fund | Ultra Small vs. Small Cap Value Fund | Ultra Small vs. Aggressive Investors 1 | Ultra Small vs. American Beacon Bridgeway |
| American Beacon vs. American Beacon Bridgeway | American Beacon vs. Small Cap Value Fund | American Beacon vs. Ultra Small Pany Market | American Beacon vs. Ultra Small Pany Fund |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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