Correlation Between Qs Moderate and American Beacon
Can any of the company-specific risk be diversified away by investing in both Qs Moderate 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 Qs Moderate and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qs Moderate Growth and American Beacon Sim, you can compare the effects of market volatilities on Qs Moderate 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 Qs Moderate with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Moderate and American Beacon.
Diversification Opportunities for Qs Moderate and American Beacon
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SCGCX and American is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Qs Moderate Growth and American Beacon Sim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Sim and Qs Moderate 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 Qs Moderate Growth 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 Sim has no effect on the direction of Qs Moderate i.e., Qs Moderate and American Beacon go up and down completely randomly.
Pair Corralation between Qs Moderate and American Beacon
Assuming the 90 days horizon Qs Moderate Growth is expected to generate 2.6 times more return on investment than American Beacon. However, Qs Moderate is 2.6 times more volatile than American Beacon Sim. It trades about 0.09 of its potential returns per unit of risk. American Beacon Sim is currently generating about 0.2 per unit of risk. If you would invest 1,522 in Qs Moderate Growth on September 12, 2024 and sell it today you would earn a total of 345.00 from holding Qs Moderate Growth or generate 22.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qs Moderate Growth vs. American Beacon Sim
Performance |
| Timeline |
| Qs Moderate Growth |
| American Beacon Sim |
Qs Moderate and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qs Moderate and American Beacon
The main advantage of trading using opposite Qs Moderate and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Moderate 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.| Qs Moderate vs. Income Fund Of | Qs Moderate vs. Income Fund Of | Qs Moderate vs. Income Fund Of | Qs Moderate vs. Income Fund Of |
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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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