Correlation Between American Beacon and Invesco SP
Can any of the company-specific risk be diversified away by investing in both American Beacon and Invesco SP 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 Invesco SP 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 Invesco SP 500, you can compare the effects of market volatilities on American Beacon and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Invesco SP.
Diversification Opportunities for American Beacon and Invesco SP
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Invesco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Select and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of American Beacon i.e., American Beacon and Invesco SP go up and down completely randomly.
Pair Corralation between American Beacon and Invesco SP
Given the investment horizon of 90 days American Beacon Select is expected to generate 1.12 times more return on investment than Invesco SP. However, American Beacon is 1.12 times more volatile than Invesco SP 500. It trades about 0.11 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.08 per unit of risk. If you would invest 2,423 in American Beacon Select on September 5, 2024 and sell it today you would earn a total of 825.00 from holding American Beacon Select or generate 34.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 42.42% |
| Values | Daily Returns |
American Beacon Select vs. Invesco SP 500
Performance |
| Timeline |
| American Beacon Select |
| Invesco SP 500 |
American Beacon and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Invesco SP
The main advantage of trading using opposite American Beacon and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Invesco SP 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 Invesco SP will offset losses from the drop in Invesco SP's long position.| American Beacon vs. Ultimus Managers Trust | American Beacon vs. Direxion Daily Regional | American Beacon vs. Direxion Daily SP | American Beacon vs. EA Series Trust |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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