Correlation Between Royce Opportunity and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Royce Opportunity 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 Royce Opportunity and Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royce Opportunity Fund and Amer Beacon Ark, you can compare the effects of market volatilities on Royce Opportunity 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 Royce Opportunity with a short position of Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Opportunity and Amer Beacon.
Diversification Opportunities for Royce Opportunity and Amer Beacon
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Royce and Amer is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Royce Opportunity Fund 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 Royce Opportunity 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 Royce Opportunity Fund 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 Royce Opportunity i.e., Royce Opportunity and Amer Beacon go up and down completely randomly.
Pair Corralation between Royce Opportunity and Amer Beacon
Assuming the 90 days horizon Royce Opportunity is expected to generate 2.53 times less return on investment than Amer Beacon. But when comparing it to its historical volatility, Royce Opportunity Fund is 1.74 times less risky than Amer Beacon. It trades about 0.05 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 816.00 in Amer Beacon Ark on September 14, 2024 and sell it today you would earn a total of 861.00 from holding Amer Beacon Ark or generate 105.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royce Opportunity Fund vs. Amer Beacon Ark
Performance |
| Timeline |
| Royce Opportunity |
| Amer Beacon Ark |
Royce Opportunity and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royce Opportunity and Amer Beacon
The main advantage of trading using opposite Royce Opportunity and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Opportunity 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.| Royce Opportunity vs. Clearbridge Value Trust | Royce Opportunity vs. T Rowe Price | Royce Opportunity vs. Clearbridge International Growth | Royce Opportunity vs. Davis Financial Fund |
| Amer Beacon vs. Palm Valley Capital | Amer Beacon vs. Royce Opportunity Fund | Amer Beacon vs. Applied Finance Explorer | Amer Beacon vs. William Blair Small |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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