Correlation Between Cref Inflation-linked and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked and Amer 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 Cref Inflation-linked and Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and Amer Beacon Ark, you can compare the effects of market volatilities on Cref Inflation-linked and Amer 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 Cref Inflation-linked with a short position of Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Amer Beacon.
Diversification Opportunities for Cref Inflation-linked and Amer Beacon
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cref and Amer is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Amer Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Ark and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Ark has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Amer Beacon go up and down completely randomly.
Pair Corralation between Cref Inflation-linked and Amer Beacon
Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 74.18 times less return on investment than Amer Beacon. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 14.68 times less risky than Amer Beacon. It trades about 0.08 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,265 in Amer Beacon Ark on September 1, 2024 and sell it today you would earn a total of 329.00 from holding Amer Beacon Ark or generate 26.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. Amer Beacon Ark
Performance |
| Timeline |
| Cref Inflation Linked |
| Amer Beacon Ark |
Cref Inflation-linked and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation-linked and Amer Beacon
The main advantage of trading using opposite Cref Inflation-linked and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation-linked position performs unexpectedly, Amer 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 Amer Beacon will offset losses from the drop in Amer Beacon's long position.| Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard 500 Index | Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard Total Stock |
| Amer Beacon vs. Ab Bond Inflation | Amer Beacon vs. Ab Bond Inflation | Amer Beacon vs. Cref Inflation Linked Bond | Amer Beacon vs. Guidepath Managed Futures |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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