Correlation Between Mid Cap and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Mid Cap 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 Mid Cap and Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth and Amer Beacon Ark, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Amer Beacon.
Diversification Opportunities for Mid Cap and Amer Beacon
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid and Amer is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth 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 Mid Cap 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 Mid Cap Growth 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 Mid Cap i.e., Mid Cap and Amer Beacon go up and down completely randomly.
Pair Corralation between Mid Cap and Amer Beacon
Assuming the 90 days horizon Mid Cap Growth is expected to generate 0.8 times more return on investment than Amer Beacon. However, Mid Cap Growth is 1.24 times less risky than Amer Beacon. It trades about 0.15 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about 0.09 per unit of risk. If you would invest 766.00 in Mid Cap Growth on August 26, 2024 and sell it today you would earn a total of 769.00 from holding Mid Cap Growth or generate 100.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Growth vs. Amer Beacon Ark
Performance |
| Timeline |
| Mid Cap Growth |
| Amer Beacon Ark |
Mid Cap and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Amer Beacon
The main advantage of trading using opposite Mid Cap and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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.| Mid Cap vs. Morgan Stanley Multi | Mid Cap vs. Growth Portfolio Class | Mid Cap vs. Small Pany Growth | Mid Cap vs. Blackrock Science Technology |
| Amer Beacon vs. Ridgeworth Innovative Growth | Amer Beacon vs. Mid Cap Growth | Amer Beacon vs. Small Pany Growth | Amer Beacon vs. Morgan Stanley Multi |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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