Correlation Between Maryland Short and American Beacon
Can any of the company-specific risk be diversified away by investing in both Maryland Short 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 Maryland Short and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maryland Short Term Tax Free and American Beacon Stephens, you can compare the effects of market volatilities on Maryland Short 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 Maryland Short with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maryland Short and American Beacon.
Diversification Opportunities for Maryland Short and American Beacon
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Maryland and American is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Maryland Short Term Tax Free 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 Maryland Short 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 Maryland Short Term Tax Free 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 Maryland Short i.e., Maryland Short and American Beacon go up and down completely randomly.
Pair Corralation between Maryland Short and American Beacon
Assuming the 90 days horizon Maryland Short is expected to generate 6.29 times less return on investment than American Beacon. But when comparing it to its historical volatility, Maryland Short Term Tax Free is 10.84 times less risky than American Beacon. It trades about 0.14 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,303 in American Beacon Stephens on August 30, 2024 and sell it today you would earn a total of 384.00 from holding American Beacon Stephens or generate 29.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maryland Short Term Tax Free vs. American Beacon Stephens
Performance |
| Timeline |
| Maryland Short Term |
| American Beacon Stephens |
Maryland Short and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maryland Short and American Beacon
The main advantage of trading using opposite Maryland Short and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maryland Short 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.| Maryland Short vs. Maryland Tax Free Bond | Maryland Short vs. Georgia Tax Free Bond | Maryland Short vs. New York Tax Free | Maryland Short vs. T Rowe Price |
| American Beacon vs. Ab Select Longshort | American Beacon vs. Calvert Short Duration | American Beacon vs. Maryland Short Term Tax Free | American Beacon vs. Aqr Long Short Equity |
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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