Correlation Between American Beacon and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both American Beacon and Tidal Trust 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 Tidal Trust 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 Tidal Trust II, you can compare the effects of market volatilities on American Beacon and Tidal Trust 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 Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Tidal Trust.
Diversification Opportunities for American Beacon and Tidal Trust
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Tidal is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Select and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of American Beacon i.e., American Beacon and Tidal Trust go up and down completely randomly.
Pair Corralation between American Beacon and Tidal Trust
Given the investment horizon of 90 days American Beacon Select is expected to generate 1.39 times more return on investment than Tidal Trust. However, American Beacon is 1.39 times more volatile than Tidal Trust II. It trades about 0.11 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.06 per unit of risk. If you would invest 2,423 in American Beacon Select on August 27, 2024 and sell it today you would earn a total of 849.00 from holding American Beacon Select or generate 35.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.23% |
| Values | Daily Returns |
American Beacon Select vs. Tidal Trust II
Performance |
| Timeline |
| American Beacon Select |
| Tidal Trust II |
American Beacon and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Tidal Trust
The main advantage of trading using opposite American Beacon and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Tidal Trust 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 Tidal Trust will offset losses from the drop in Tidal Trust's long position.The idea behind American Beacon Select and Tidal Trust II pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Tidal Trust vs. First Trust Exchange Traded | Tidal Trust vs. Ultimus Managers Trust | Tidal Trust vs. Horizon Kinetics Medical | Tidal Trust vs. Harbor Health Care |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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