Correlation Between Health Biotchnology and American Beacon
Can any of the company-specific risk be diversified away by investing in both Health Biotchnology 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 Health Biotchnology and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Biotchnology Portfolio and American Beacon Stephens, you can compare the effects of market volatilities on Health Biotchnology 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 Health Biotchnology with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Biotchnology and American Beacon.
Diversification Opportunities for Health Biotchnology and American Beacon
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Health and American is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Health Biotchnology Portfolio and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens and Health Biotchnology 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 Health Biotchnology Portfolio 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 Stephens has no effect on the direction of Health Biotchnology i.e., Health Biotchnology and American Beacon go up and down completely randomly.
Pair Corralation between Health Biotchnology and American Beacon
Assuming the 90 days horizon Health Biotchnology Portfolio is expected to under-perform the American Beacon. But the mutual fund apears to be less risky and, when comparing its historical volatility, Health Biotchnology Portfolio is 1.22 times less risky than American Beacon. The mutual fund trades about -0.01 of its potential returns per unit of risk. The American Beacon Stephens is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,994 in American Beacon Stephens on August 26, 2024 and sell it today you would earn a total of 1,210 from holding American Beacon Stephens or generate 40.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Biotchnology Portfolio vs. American Beacon Stephens
Performance |
| Timeline |
| Health Biotchnology |
| American Beacon Stephens |
Health Biotchnology and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Biotchnology and American Beacon
The main advantage of trading using opposite Health Biotchnology and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Biotchnology 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.| Health Biotchnology vs. Commonwealth Global Fund | Health Biotchnology vs. T Rowe Price | Health Biotchnology vs. Nuveen Global Real | Health Biotchnology vs. Us Global Investors |
| American Beacon vs. Health Biotchnology Portfolio | American Beacon vs. Live Oak Health | American Beacon vs. Allianzgi Health Sciences | American Beacon vs. Blackrock Health Sciences |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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