Correlation Between EA Series and American Beacon
Can any of the company-specific risk be diversified away by investing in both EA Series 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 EA Series and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EA Series Trust and American Beacon Select, you can compare the effects of market volatilities on EA Series 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 EA Series with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Series and American Beacon.
Diversification Opportunities for EA Series and American Beacon
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DRLL and American is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and American Beacon Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Select and EA Series 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 EA Series Trust 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 Select has no effect on the direction of EA Series i.e., EA Series and American Beacon go up and down completely randomly.
Pair Corralation between EA Series and American Beacon
Given the investment horizon of 90 days EA Series Trust is expected to generate 0.91 times more return on investment than American Beacon. However, EA Series Trust is 1.1 times less risky than American Beacon. It trades about 0.26 of its potential returns per unit of risk. American Beacon Select is currently generating about 0.23 per unit of risk. If you would invest 2,841 in EA Series Trust on August 28, 2024 and sell it today you would earn a total of 192.00 from holding EA Series Trust or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EA Series Trust vs. American Beacon Select
Performance |
| Timeline |
| EA Series Trust |
| American Beacon Select |
EA Series and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EA Series and American Beacon
The main advantage of trading using opposite EA Series and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series 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.| EA Series vs. EA Series Trust | EA Series vs. EA Series Trust | EA Series vs. Rumble Inc | EA Series vs. EA Series Trust |
| American Beacon vs. First Trust Exchange Traded | American Beacon vs. Ultimus Managers Trust | American Beacon vs. Horizon Kinetics Medical | American Beacon vs. Harbor Health Care |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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