Correlation Between American Beacon and Sprott Junior
Can any of the company-specific risk be diversified away by investing in both American Beacon and Sprott Junior 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 American Beacon and Sprott Junior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Select and Sprott Junior Copper, you can compare the effects of market volatilities on American Beacon and Sprott Junior 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 American Beacon with a short position of Sprott Junior. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Sprott Junior.
Diversification Opportunities for American Beacon and Sprott Junior
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Sprott is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Select and Sprott Junior Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Copper and American Beacon 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 American Beacon Select are associated (or correlated) with Sprott Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Junior Copper has no effect on the direction of American Beacon i.e., American Beacon and Sprott Junior go up and down completely randomly.
Pair Corralation between American Beacon and Sprott Junior
Given the investment horizon of 90 days American Beacon is expected to generate 14.76 times less return on investment than Sprott Junior. But when comparing it to its historical volatility, American Beacon Select is 33.78 times less risky than Sprott Junior. It trades about 0.11 of its potential returns per unit of risk. Sprott Junior Copper is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Sprott Junior Copper on August 29, 2024 and sell it today you would earn a total of 2,147 from holding Sprott Junior Copper or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 44.66% |
| Values | Daily Returns |
American Beacon Select vs. Sprott Junior Copper
Performance |
| Timeline |
| American Beacon Select |
| Sprott Junior Copper |
American Beacon and Sprott Junior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Sprott Junior
The main advantage of trading using opposite American Beacon and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Sprott Junior 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 Sprott Junior will offset losses from the drop in Sprott Junior's long position.| American Beacon vs. First Trust Exchange Traded | American Beacon vs. Ultimus Managers Trust | American Beacon vs. Horizon Kinetics Medical | American Beacon vs. Harbor Health Care |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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