Correlation Between Perkins Mid and American Beacon
Can any of the company-specific risk be diversified away by investing in both Perkins Mid 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 Perkins Mid and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perkins Mid Cap and American Beacon Large, you can compare the effects of market volatilities on Perkins Mid 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 Perkins Mid with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perkins Mid and American Beacon.
Diversification Opportunities for Perkins Mid and American Beacon
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Perkins and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Perkins Mid Cap and American Beacon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Large and Perkins Mid 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 Perkins Mid Cap 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 Large has no effect on the direction of Perkins Mid i.e., Perkins Mid and American Beacon go up and down completely randomly.
Pair Corralation between Perkins Mid and American Beacon
Assuming the 90 days horizon Perkins Mid is expected to generate 1.1 times less return on investment than American Beacon. In addition to that, Perkins Mid is 1.11 times more volatile than American Beacon Large. It trades about 0.06 of its total potential returns per unit of risk. American Beacon Large is currently generating about 0.08 per unit of volatility. If you would invest 2,315 in American Beacon Large on August 26, 2024 and sell it today you would earn a total of 813.00 from holding American Beacon Large or generate 35.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perkins Mid Cap vs. American Beacon Large
Performance |
| Timeline |
| Perkins Mid Cap |
| American Beacon Large |
Perkins Mid and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perkins Mid and American Beacon
The main advantage of trading using opposite Perkins Mid and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perkins Mid 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.| Perkins Mid vs. Janus Trarian Fund | Perkins Mid vs. Janus Overseas Fund | Perkins Mid vs. Janus Growth And | Perkins Mid vs. Janus Global Select |
| American Beacon vs. Northern Small Cap | American Beacon vs. Ssga International Stock | American Beacon vs. American Beacon International | American Beacon vs. Perkins Mid 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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