Correlation Between Prudential Core and American Beacon
Can any of the company-specific risk be diversified away by investing in both Prudential Core 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 Prudential Core and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Core Conservative and American Beacon Stephens, you can compare the effects of market volatilities on Prudential Core 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 Prudential Core with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Core and American Beacon.
Diversification Opportunities for Prudential Core and American Beacon
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prudential and American is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Core Conservative and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens and Prudential Core 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 Prudential Core Conservative 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 Stephens has no effect on the direction of Prudential Core i.e., Prudential Core and American Beacon go up and down completely randomly.
Pair Corralation between Prudential Core and American Beacon
Assuming the 90 days horizon Prudential Core is expected to generate 18.18 times less return on investment than American Beacon. But when comparing it to its historical volatility, Prudential Core Conservative is 3.76 times less risky than American Beacon. It trades about 0.04 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,574 in American Beacon Stephens on August 30, 2024 and sell it today you would earn a total of 109.00 from holding American Beacon Stephens or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Prudential Core Conservative vs. American Beacon Stephens
Performance |
| Timeline |
| Prudential Core Cons |
| American Beacon Stephens |
Prudential Core and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Core and American Beacon
The main advantage of trading using opposite Prudential Core and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Core 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.| Prudential Core vs. T Rowe Price | Prudential Core vs. Multisector Bond Sma | Prudential Core vs. Rbc Bluebay Global | Prudential Core vs. Ab Bond Inflation |
| American Beacon vs. Sterling Capital Short | American Beacon vs. Touchstone Ohio Tax | American Beacon vs. Mirova Global Green | American Beacon vs. T Rowe Price |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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