Correlation Between Arrow Managed and American Beacon
Can any of the company-specific risk be diversified away by investing in both Arrow Managed 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 Arrow Managed and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Managed Futures and American Beacon Twentyfour, you can compare the effects of market volatilities on Arrow Managed 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 Arrow Managed with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and American Beacon.
Diversification Opportunities for Arrow Managed and American Beacon
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and American is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen and Arrow Managed 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 Arrow Managed Futures 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 Twen has no effect on the direction of Arrow Managed i.e., Arrow Managed and American Beacon go up and down completely randomly.
Pair Corralation between Arrow Managed and American Beacon
Assuming the 90 days horizon Arrow Managed is expected to generate 1.76 times less return on investment than American Beacon. In addition to that, Arrow Managed is 17.12 times more volatile than American Beacon Twentyfour. It trades about 0.01 of its total potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.27 per unit of volatility. If you would invest 781.00 in American Beacon Twentyfour on August 29, 2024 and sell it today you would earn a total of 103.00 from holding American Beacon Twentyfour or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Managed Futures vs. American Beacon Twentyfour
Performance |
| Timeline |
| Arrow Managed Futures |
| American Beacon Twen |
Arrow Managed and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and American Beacon
The main advantage of trading using opposite Arrow Managed and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed 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.| Arrow Managed vs. Pimco Trends Managed | Arrow Managed vs. HUMANA INC | Arrow Managed vs. Aquagold International | Arrow Managed vs. Barloworld Ltd ADR |
| American Beacon vs. Transamerica Emerging Markets | American Beacon vs. Arrow Managed Futures | American Beacon vs. Vanguard Emerging Markets | American Beacon vs. Ep Emerging Markets |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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