Correlation Between Ab Global and American Beacon
Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Ab Global and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Risk and American Beacon Stephens, you can compare the effects of market volatilities on Ab Global 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 Ab Global with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and American Beacon.
Diversification Opportunities for Ab Global and American Beacon
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CABIX and American is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens and Ab Global 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 Ab Global Risk 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 Stephens has no effect on the direction of Ab Global i.e., Ab Global and American Beacon go up and down completely randomly.
Pair Corralation between Ab Global and American Beacon
Assuming the 90 days horizon Ab Global is expected to generate 3.29 times less return on investment than American Beacon. But when comparing it to its historical volatility, Ab Global Risk is 1.49 times less risky than American Beacon. It trades about 0.11 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,182 in American Beacon Stephens on October 21, 2024 and sell it today you would earn a total of 42.00 from holding American Beacon Stephens or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Risk vs. American Beacon Stephens
Performance |
| Timeline |
| Ab Global Risk |
| American Beacon Stephens |
Ab Global and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and American Beacon
The main advantage of trading using opposite Ab Global and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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.| Ab Global vs. Live Oak Health | Ab Global vs. Alger Health Sciences | Ab Global vs. Tekla Healthcare Investors | Ab Global vs. Deutsche Health And |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |