Correlation Between Nasdaq 100 and American Beacon
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and American Beacon Ark, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and American Beacon.
Diversification Opportunities for Nasdaq 100 and American Beacon
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq and American is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and American Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ark and Nasdaq 100 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 Nasdaq 100 2x Strategy 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 Ark has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and American Beacon go up and down completely randomly.
Pair Corralation between Nasdaq 100 and American Beacon
Assuming the 90 days horizon Nasdaq 100 is expected to generate 15.29 times less return on investment than American Beacon. But when comparing it to its historical volatility, Nasdaq 100 2x Strategy is 1.02 times less risky than American Beacon. It trades about 0.01 of its potential returns per unit of risk. American Beacon Ark is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,582 in American Beacon Ark on October 24, 2024 and sell it today you would earn a total of 60.00 from holding American Beacon Ark or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. American Beacon Ark
Performance |
| Timeline |
| Nasdaq 100 2x |
| American Beacon Ark |
Nasdaq 100 and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and American Beacon
The main advantage of trading using opposite Nasdaq 100 and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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.| Nasdaq 100 vs. Credit Suisse Managed | Nasdaq 100 vs. Ab Bond Inflation | Nasdaq 100 vs. Ab Bond Inflation | Nasdaq 100 vs. Fidelity Sai Inflationfocused |
| American Beacon vs. Fidelity Government Money | American Beacon vs. Tiaa Cref Life Funds | American Beacon vs. Lord Abbett Emerging | American Beacon vs. Jpmorgan Trust Iv |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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