Correlation Between Invesco SP and American Beacon
Can any of the company-specific risk be diversified away by investing in both Invesco SP 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 Invesco SP and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco SP 500 and American Beacon Select, you can compare the effects of market volatilities on Invesco SP 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 Invesco SP with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and American Beacon.
Diversification Opportunities for Invesco SP and American Beacon
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and American is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and American Beacon Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Select and Invesco SP 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 Invesco SP 500 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 Select has no effect on the direction of Invesco SP i.e., Invesco SP and American Beacon go up and down completely randomly.
Pair Corralation between Invesco SP and American Beacon
Given the investment horizon of 90 days Invesco SP 500 is expected to generate 0.64 times more return on investment than American Beacon. However, Invesco SP 500 is 1.57 times less risky than American Beacon. It trades about 0.14 of its potential returns per unit of risk. American Beacon Select is currently generating about 0.06 per unit of risk. If you would invest 5,776 in Invesco SP 500 on September 13, 2024 and sell it today you would earn a total of 944.00 from holding Invesco SP 500 or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco SP 500 vs. American Beacon Select
Performance |
| Timeline |
| Invesco SP 500 |
| American Beacon Select |
Invesco SP and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and American Beacon
The main advantage of trading using opposite Invesco SP and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP 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.| Invesco SP vs. American Beacon Select | Invesco SP vs. Columbia Emerging Markets | Invesco SP vs. Direxion Daily Homebuilders | Invesco SP vs. Direxion Daily Cnsmr |
| American Beacon vs. Columbia Emerging Markets | American Beacon vs. Direxion Daily Homebuilders | American Beacon vs. Direxion Daily Cnsmr | American Beacon vs. Fidelity MSCI Consumer |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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