Correlation Between Fm Investments and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Fm Investments 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 Fm Investments and Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fm Investments Large and Amer Beacon Garcia, you can compare the effects of market volatilities on Fm Investments 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 Fm Investments with a short position of Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fm Investments and Amer Beacon.
Diversification Opportunities for Fm Investments and Amer Beacon
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IAFLX and Amer is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fm Investments Large and Amer Beacon Garcia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Garcia and Fm Investments 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 Fm Investments Large 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 Garcia has no effect on the direction of Fm Investments i.e., Fm Investments and Amer Beacon go up and down completely randomly.
Pair Corralation between Fm Investments and Amer Beacon
Assuming the 90 days horizon Fm Investments Large is expected to generate 2.02 times more return on investment than Amer Beacon. However, Fm Investments is 2.02 times more volatile than Amer Beacon Garcia. It trades about 0.3 of its potential returns per unit of risk. Amer Beacon Garcia is currently generating about 0.11 per unit of risk. If you would invest 1,786 in Fm Investments Large on September 4, 2024 and sell it today you would earn a total of 99.00 from holding Fm Investments Large or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Fm Investments Large vs. Amer Beacon Garcia
Performance |
| Timeline |
| Fm Investments Large |
| Amer Beacon Garcia |
Fm Investments and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fm Investments and Amer Beacon
The main advantage of trading using opposite Fm Investments and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fm Investments 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.The idea behind Fm Investments Large and Amer Beacon Garcia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Amer Beacon vs. Vanguard Star Fund | Amer Beacon vs. Multimanager Lifestyle Aggressive | Amer Beacon vs. Needham Aggressive Growth | Amer Beacon vs. Lgm Risk Managed |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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