Correlation Between NYSE Composite and AMERICAN BEACON
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and AMERICAN BEACON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and AMERICAN BEACON INTERNATIONAL, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of AMERICAN BEACON. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and AMERICAN BEACON.
Diversification Opportunities for NYSE Composite and AMERICAN BEACON
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and AMERICAN is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and AMERICAN BEACON INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN BEACON INTE and NYSE Composite 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 NYSE Composite 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 INTE has no effect on the direction of NYSE Composite i.e., NYSE Composite and AMERICAN BEACON go up and down completely randomly.
Pair Corralation between NYSE Composite and AMERICAN BEACON
Assuming the 90 days trading horizon NYSE Composite is expected to generate 19.56 times more return on investment than AMERICAN BEACON. However, NYSE Composite is 19.56 times more volatile than AMERICAN BEACON INTERNATIONAL. It trades about 0.42 of its potential returns per unit of risk. AMERICAN BEACON INTERNATIONAL is currently generating about 0.15 per unit of risk. If you would invest 1,923,895 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 103,309 from holding NYSE Composite or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. AMERICAN BEACON INTERNATIONAL
Performance |
| Timeline |
NYSE Composite and AMERICAN BEACON Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
AMERICAN BEACON INTERNATIONAL
Pair trading matchups for AMERICAN BEACON
Pair Trading with NYSE Composite and AMERICAN BEACON
The main advantage of trading using opposite NYSE Composite and AMERICAN BEACON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| AMERICAN BEACON vs. Vanguard Total Stock | AMERICAN BEACON vs. SPDR SP 500 | AMERICAN BEACON vs. iShares Core SP | AMERICAN BEACON vs. Vanguard Total Bond |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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