Correlation Between Enhanced and American Beacon
Can any of the company-specific risk be diversified away by investing in both Enhanced 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 Enhanced and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhanced Large Pany and American Beacon Stephens, you can compare the effects of market volatilities on Enhanced 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 Enhanced with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced and American Beacon.
Diversification Opportunities for Enhanced and American Beacon
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enhanced and American is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Large Pany 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 Enhanced 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 Enhanced Large Pany 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 Enhanced i.e., Enhanced and American Beacon go up and down completely randomly.
Pair Corralation between Enhanced and American Beacon
Assuming the 90 days horizon Enhanced Large Pany is expected to generate 0.72 times more return on investment than American Beacon. However, Enhanced Large Pany is 1.39 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 0.03 per unit of risk. If you would invest 970.00 in Enhanced Large Pany on December 4, 2024 and sell it today you would earn a total of 516.00 from holding Enhanced Large Pany or generate 53.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enhanced Large Pany vs. American Beacon Stephens
Performance |
| Timeline |
| Enhanced Large Pany |
| American Beacon Stephens |
Enhanced and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enhanced and American Beacon
The main advantage of trading using opposite Enhanced and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhanced 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.| Enhanced vs. Us Micro Cap | Enhanced vs. Dfa Short Term Government | Enhanced vs. Emerging Markets Small | Enhanced vs. Dfa One Year Fixed |
| American Beacon vs. Dreyfusstandish Global Fixed | American Beacon vs. Nationwide E Plus | American Beacon vs. Federated Government Income | American Beacon vs. Bbh Partner 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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