Correlation Between Domini International and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Domini International 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 Domini International and Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Domini International Opportunities and Amer Beacon Ark, you can compare the effects of market volatilities on Domini International 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 Domini International with a short position of Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Domini International and Amer Beacon.
Diversification Opportunities for Domini International and Amer Beacon
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Domini and Amer is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Domini International Opportuni 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 Domini International 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 Domini International Opportunities 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 Domini International i.e., Domini International and Amer Beacon go up and down completely randomly.
Pair Corralation between Domini International and Amer Beacon
Assuming the 90 days horizon Domini International Opportunities is expected to generate 0.16 times more return on investment than Amer Beacon. However, Domini International Opportunities is 6.33 times less risky than Amer Beacon. It trades about -0.14 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about -0.28 per unit of risk. If you would invest 1,099 in Domini International Opportunities on December 1, 2024 and sell it today you would lose (12.00) from holding Domini International Opportunities or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Domini International Opportuni vs. Amer Beacon Ark
Performance |
| Timeline |
| Domini International |
| Amer Beacon Ark |
Domini International and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Domini International and Amer Beacon
The main advantage of trading using opposite Domini International and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Domini International 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.| Domini International vs. Cornerstone Advisors Real | Domini International vs. Domini Impact International | Domini International vs. Domini Impact Bond |
| Amer Beacon vs. Ridgeworth Innovative Growth | Amer Beacon vs. Mid Cap Growth | Amer Beacon vs. Small Pany Growth | Amer Beacon vs. Morgan Stanley Multi |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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