Correlation Between Qs Growth and American Beacon
Can any of the company-specific risk be diversified away by investing in both Qs Growth 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 Qs Growth and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qs Growth Fund and American Beacon Stephens, you can compare the effects of market volatilities on Qs Growth 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 Qs Growth with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Growth and American Beacon.
Diversification Opportunities for Qs Growth and American Beacon
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LANIX and American is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Qs Growth Fund and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens and Qs Growth 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 Qs Growth Fund 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 Stephens has no effect on the direction of Qs Growth i.e., Qs Growth and American Beacon go up and down completely randomly.
Pair Corralation between Qs Growth and American Beacon
Assuming the 90 days horizon Qs Growth is expected to generate 1.4 times less return on investment than American Beacon. But when comparing it to its historical volatility, Qs Growth Fund is 1.34 times less risky than American Beacon. It trades about 0.09 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,777 in American Beacon Stephens on September 14, 2024 and sell it today you would earn a total of 1,422 from holding American Beacon Stephens or generate 51.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Qs Growth Fund vs. American Beacon Stephens
Performance |
| Timeline |
| Qs Growth Fund |
| American Beacon Stephens |
Qs Growth and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qs Growth and American Beacon
The main advantage of trading using opposite Qs Growth and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Growth 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.| Qs Growth vs. Buffalo High Yield | Qs Growth vs. Payden High Income | Qs Growth vs. Strategic Advisers Income | Qs Growth vs. Janus High Yield Fund |
| American Beacon vs. Smallcap Growth Fund | American Beacon vs. L Abbett Growth | American Beacon vs. Qs Moderate Growth | American Beacon vs. Qs Growth Fund |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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