Correlation Between Dana Large and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Dana Large and Amer 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 Dana Large and Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Large Cap and Amer Beacon Ark, you can compare the effects of market volatilities on Dana Large and Amer 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 Dana Large with a short position of Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Amer Beacon.
Diversification Opportunities for Dana Large and Amer Beacon
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dana and Amer is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Amer Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Ark and Dana Large 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 Dana Large Cap are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Ark has no effect on the direction of Dana Large i.e., Dana Large and Amer Beacon go up and down completely randomly.
Pair Corralation between Dana Large and Amer Beacon
Assuming the 90 days horizon Dana Large is expected to generate 2.38 times less return on investment than Amer Beacon. But when comparing it to its historical volatility, Dana Large Cap is 2.53 times less risky than Amer Beacon. It trades about 0.12 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,204 in Amer Beacon Ark on September 3, 2024 and sell it today you would earn a total of 378.00 from holding Amer Beacon Ark or generate 31.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Large Cap vs. Amer Beacon Ark
Performance |
| Timeline |
| Dana Large Cap |
| Amer Beacon Ark |
Dana Large and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana Large and Amer Beacon
The main advantage of trading using opposite Dana Large and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large position performs unexpectedly, Amer 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 Amer Beacon will offset losses from the drop in Amer Beacon's long position.| Dana Large vs. Msift High Yield | Dana Large vs. Gmo High Yield | Dana Large vs. Guggenheim High Yield | Dana Large vs. Pgim High Yield |
| Amer Beacon vs. Dana Large Cap | Amer Beacon vs. Dunham Large Cap | Amer Beacon vs. Vela Large Cap | Amer Beacon vs. Siit Large 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |