Correlation Between Blackrock and American Beacon
Can any of the company-specific risk be diversified away by investing in both Blackrock 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 Blackrock and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Sm Cap and American Beacon Small, you can compare the effects of market volatilities on Blackrock 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 Blackrock with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and American Beacon.
Diversification Opportunities for Blackrock and American Beacon
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Blackrock and American is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Sm Cap and American Beacon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Small and Blackrock 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 Blackrock Sm 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 Small has no effect on the direction of Blackrock i.e., Blackrock and American Beacon go up and down completely randomly.
Pair Corralation between Blackrock and American Beacon
Assuming the 90 days horizon Blackrock Sm Cap is expected to generate 1.02 times more return on investment than American Beacon. However, Blackrock is 1.02 times more volatile than American Beacon Small. It trades about 0.22 of its potential returns per unit of risk. American Beacon Small is currently generating about 0.21 per unit of risk. If you would invest 2,550 in Blackrock Sm Cap on August 29, 2024 and sell it today you would earn a total of 210.00 from holding Blackrock Sm Cap or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Sm Cap vs. American Beacon Small
Performance |
| Timeline |
| Blackrock Sm Cap |
| American Beacon Small |
Blackrock and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock and American Beacon
The main advantage of trading using opposite Blackrock and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock 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.| Blackrock vs. Vanguard Small Cap Index | Blackrock vs. Vanguard Small Cap Index | Blackrock vs. Vanguard Small Cap Index | Blackrock vs. Vanguard Small Cap Index |
| American Beacon vs. Blackrock Sm Cap | American Beacon vs. Tax Managed Mid Small | American Beacon vs. Huber Capital Diversified | American Beacon vs. Delaware Limited Term Diversified |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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