Correlation Between ETRACS Quarterly and American Beacon
Can any of the company-specific risk be diversified away by investing in both ETRACS Quarterly 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 ETRACS Quarterly and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS Quarterly Pay and American Beacon Select, you can compare the effects of market volatilities on ETRACS Quarterly 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 ETRACS Quarterly with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Quarterly and American Beacon.
Diversification Opportunities for ETRACS Quarterly and American Beacon
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETRACS and American is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Quarterly Pay and American Beacon Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Select and ETRACS Quarterly 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 ETRACS Quarterly Pay 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 Select has no effect on the direction of ETRACS Quarterly i.e., ETRACS Quarterly and American Beacon go up and down completely randomly.
Pair Corralation between ETRACS Quarterly and American Beacon
Given the investment horizon of 90 days ETRACS Quarterly Pay is expected to generate 0.95 times more return on investment than American Beacon. However, ETRACS Quarterly Pay is 1.05 times less risky than American Beacon. It trades about 0.11 of its potential returns per unit of risk. American Beacon Select is currently generating about 0.1 per unit of risk. If you would invest 3,679 in ETRACS Quarterly Pay on September 12, 2024 and sell it today you would earn a total of 2,400 from holding ETRACS Quarterly Pay or generate 65.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 57.37% |
| Values | Daily Returns |
ETRACS Quarterly Pay vs. American Beacon Select
Performance |
| Timeline |
| ETRACS Quarterly Pay |
| American Beacon Select |
ETRACS Quarterly and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS Quarterly and American Beacon
The main advantage of trading using opposite ETRACS Quarterly and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Quarterly 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.| ETRACS Quarterly vs. ETRACS Quarterly Pay | ETRACS Quarterly vs. ETRACS Monthly Pay | ETRACS Quarterly vs. ETRACS Monthly Pay | ETRACS Quarterly vs. UBS AG London |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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