Correlation Between Fuller Thaler and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Fuller Thaler 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 Fuller Thaler and Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuller Thaler Behavioral and Amer Beacon Ark, you can compare the effects of market volatilities on Fuller Thaler 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 Fuller Thaler with a short position of Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuller Thaler and Amer Beacon.
Diversification Opportunities for Fuller Thaler and Amer Beacon
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FULLER and Amer is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fuller Thaler Behavioral 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 Fuller Thaler 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 Fuller Thaler Behavioral 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 Fuller Thaler i.e., Fuller Thaler and Amer Beacon go up and down completely randomly.
Pair Corralation between Fuller Thaler and Amer Beacon
Assuming the 90 days horizon Fuller Thaler Behavioral is expected to generate 0.49 times more return on investment than Amer Beacon. However, Fuller Thaler Behavioral is 2.06 times less risky than Amer Beacon. It trades about 0.11 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about 0.05 per unit of risk. If you would invest 3,915 in Fuller Thaler Behavioral on September 4, 2024 and sell it today you would earn a total of 1,304 from holding Fuller Thaler Behavioral or generate 33.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fuller Thaler Behavioral vs. Amer Beacon Ark
Performance |
| Timeline |
| Fuller Thaler Behavioral |
| Amer Beacon Ark |
Fuller Thaler and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuller Thaler and Amer Beacon
The main advantage of trading using opposite Fuller Thaler and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuller Thaler 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.| Fuller Thaler vs. Fuller Thaler Behavioral | Fuller Thaler vs. Undiscovered Managers Behavioral | Fuller Thaler vs. Calvert Small Cap | Fuller Thaler vs. Doubleline Shiller Enhanced |
| Amer Beacon vs. Fuller Thaler Behavioral | Amer Beacon vs. Principal Lifetime Hybrid | Amer Beacon vs. Northern Small Cap | Amer Beacon vs. Tax Managed Mid Small |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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